Here's one from https://ipo.orgtfo.info Example for RSU: Assume you have 10,000 shares of stocks vested on Lyft IPO day. At $72 per share, they are worth $720,000. If Lyft withholds 25% (worth $180,000), then you would be awarded 7500 shares. Assume you are taxed at a rate of 40%, your tax due would be $288,000 - $180,000=$108,000. If the stock price goes down to $50 when the lockup window expires, then you need to sell another $108,000/$50=2160 shares to cover taxes. Now you have 7500-2160=5340 shares left, and the total value would be $267,000. So, it's not as much as you thought.
This is a great one! I also tried the calculator on that website and it looks correct to me. Thanks
Can you explain the part where "Lyft withholds 25%". Why would they happen if all 100k shares have vested.
Also be careful about exercising options. That is when you buy your vested shares at the grant price. I purchased mines asap because I wanted to benefit from long-term capital gains, which is holding the stock for over 1 year. Even though you havenât sold the stock, it has tax implications because the different between the grant price and market price at the time of exercise is calculated towards your income for AMT. Bottom line in TurboTax, when I entered my option exercise info I almost had a heart attack. AMT sucks!
If you don't mind sharing, which company did you buy options for ?
AMT fucking blows, but at least you get credit carryover. My advice, talk to an accountant before exercising or selling so they can go over scenarios specific to your case. We got burned by AMT on some ISO's and it blows.
Looks like housing market in Bay and Seattle will skyrocket in 6 months when employees start selling stocks
Nah
The market is robust to IPOs. The folks that would have enough to outbid the current avg buyer represent such a small population that their lumpy income won't move the market by a lot. Also, after an IPO, there's often some amount of flight. I wouldnt be scared on the short run. For example, look at the south bay market after FB IPOed, the most hyped and largest IPO at the time. The market was less mature and the IPo was bigger than any of the ones that we have this year. I dont know the numbers but I imagine that the year that FB IPOed also came with a few others, making it a decent comparable. That all said, idk tbh
Easy answer, 50%
Bernie would think that is too less.
Agreed. Lots of people making this more complicated than it is. 46.5%. To be more exact. EDIT: I donât live in CA so i forgot the state income tax is so high. âEasy answerâ is dead on @ 50%. You might think that is flippant sarcasm, but you are going to pay an accountant a lot and end up with the exact same 50% result.
SPLK is long past IPO but I can say that the withholding rate has been about 42% combined CA state and federal. But the tax law changed and I wind up owing more (due as estimated taxes) since the 2018 tax law.
6k...
When you do your taxes, be sure to look up cost basis. Your stock options are taxed as compensation, but if you just import the data from the brokerage, it will appear as capital gains. There's a lot more to it, but I'm not a financial professional.
What do you mean when you say stock options are taxed as compensation?
That was how it was explained to me, since your stock options are given to you as a condition of your employment, the tax rate is different than if you had simply purchased the stock at that price and then sold it (capital gains). Like I said, not a financial professional, just sharing my experience. For example, I have typically done my own taxes, and just importing all my data left me with a tax bill of over $10k, but once I learned about cost basis and adjusted the return to properly account for my stock options, I got a return of more than $2k.
~3M in total equity at Fridayâs closing price
$352000 No tax since none of it vests this year!
How long were you there?
Wait why no tax?