I'm pretty sure vested equity counts as income to the IRS. So WTF am I supposed to do if equity makes up 50%+ of my total income in a low CoC market? Doesn't the IRS know that selling a minority interest in a non-liquid asset isn't like selling a stock? Do they get that I'd be lucky to recoup 50% on the dollar if I tried to sell my equity stake before an exit?
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Sounds like you make enough to hire an accountant.
Not really... I'm just a lowly analyst who took a way below market salary in exchange for equity without thinking about the cluster fuck of a tax liability I have created for myself.
Can you have in structured as an option instead?
Ever wonder why CEOs sell stock and say its to pay cash taxes?
Zuckerberg sold $1bn in shares after the FB IPO to cover his equity comp after IPO...
Happens all the time with option incentive packages.
Yep, once you exercise that option...boom.
I can tell you this, in an audit, lying about income will land you in prison. Lying about deductions will just get you a tax bill. If you're going to fudge, fudge on the deductions, not the gross.
Looks like you're about to be Land Rich and Cash Poor.
Good luck. You probably need an accountant to help you with this one.
So this is how hard money lending came to be....
First, kind of disappointing that you claim to have traded significant income via salary for a form of compensation that you don't understand the mechanics of. In general, this type of decision making is a recipe for business failure. Secondly, if I understand your situation correctly, you should not have a tax liability unless the equity participation was structured incorrectly. In any case, speak with an accountant or provide more clarity into your situation and I'll answer to the best of my knowledge.
Wasn't really an option. More of an "we want our interests to be aligned and we want you to eat what you kill." Thankfully, it is not too late to structure the bulk of this correctly.
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