RSUs in startups that end up being worthless

New
duddleee

New

duddleee
Apr 3 35 Comments

I work for a no name startup. Got 40K illiquid RSUs in paper money that vested in 2021.
Today. I am finding out I need to pay an extra $6K real money on my 2021 return.

I am almost certain the startup will fail and not IPO.

How is this a good deal?

What should my game plan be to avoid this in the future? This is leaving a very bad aftertaste in my mouth.

Do I have to wait for the company to go belly up to claim loss on future tax returns?

I wish I could give back this worthless equity grant.

TC 180K real money + 40K paper money

comments

Want to comment? LOG IN or SIGN UP
TOP 35 Comments
  • Amazon
    Stonks117

    Go to company page Amazon

    Stonks117
    You pay taxes on paper money RSUs? I didn’t think that was a thing.
    Apr 3 3
    • If they’re standard double-trigger RSUs, then you don’t owe any taxes on them because the RSU’s technically are not delivered to you, and you don’t own them, until the second trigger event. If you don’t have double-trigger RSUs then that’s problematic, and points to mismanagement of equity at the startup. So in that case, bail from the company.
      Apr 3
    • Google
      h1#

      Go to company page Google

      h1#
      Airtable ^ has the correct answer.
      Apr 3
  • Business Insider
    support 🇺🇦

    Go to company page Business Insider

    PRE
    Capital One, Anheuser-Busch, Saatchi & Saatchi, Macy's
    support 🇺🇦
    Wait I’m confused - if the startup isn’t trading on a public or private market, your RSUs have a fair market value of 0.

    Essentially, if you can’t sell something, then it has no value until you sell it, and therefore you shouldn’t be taxed on it.

    Are you sure you’re not being taxed on a bonus or something?
    Apr 3 6
    • SAP
      RzDl47

      Go to company page SAP

      RzDl47
      That's not true. It still have a FMV even if illiquid.
      Apr 3
    • Amazon
      uQze48

      Go to company page Amazon

      uQze48
      Did you exercise the options? Then you owe AMT on the difference between strike price and current valuation. But if you feel the company is not going anywhere, don’t exercise options early. You’ll pay more in taxes if an IPO does happen, but lowers your risk.
      Apr 23
  • Amazon
    NdjaoM

    Go to company page Amazon

    NdjaoM
    What startup?
    Apr 3 0
  • You don’t pay taxes until you sell and additionally there is no tax if selling results in no gain.

    That $6k may be because stock vest counts as regular income and during vest there was nothing withheld. Usually portion of stock is auto sold during time of vest and withheld. Maybe yours didn’t auto sell and you received all the stocks in your brokerage.
    Apr 3 8
    • New
      duddleee

      New

      duddleee
      OP
      So basically, I’m being forced to use my cash compensation to purchase illiquid shares. And wait years before I can recoup some of my losses.

      How is this a good deal?
      Apr 4
    • Google
      anticoast

      Go to company page Google

      anticoast
      Yes. I would just buy when you leave company
      Apr 4
  • New
    nrgoisjd

    New

    nrgoisjd
    Why are you still at the startup if you’re convinced it will fail
    Apr 3 0