Achieving Zero Taxation on Sale of Your Startup Equity
Updated: Dec 29, 2021
Last Thursday, on September 3, 2020, CEOWorld magazine published an article I wrote on “Achieving Zero Taxation on Sale of Your Startup Equity”.
This new article is designed for CEOs, C-level and senior executives, who are considering taking a position in a startup or early stage company in life sciences, tech, e-commerce or another high growth area of the economy, where executive equity may comprise a major part of your compensation package.
My article discusses how taking equity in qualified small business stock may enable you to have zero Federal taxation on all or most of your appreciation on a sale of shares after 5 years. That exclusion from tax applies to not only the Federal capital gains tax but also the net investment income tax and the alternative minimum tax (AMT), on appreciation up to $10 million or 10x your adjusted tax basis in the stock, whichever is greater.
The article also includes a number of important tips to qualify your shares for this tax exclusion on sale, including the following:
Obtain stock not options – only actual stock issued will qualify as QSBS and start your holding period to qualify for tax free treatment;
Making a Section 83(b) tax election for QSBS to eliminate ordinary income as well as capital gains tax,
Assuring the business is qualified, including that the business is still under $50 million in gross assets when QSBS are issued to you, and
Planning your roll-over if needed to meet the 5-year holding period even if you sell your shares within that period.
To see my full CEOWorld magazine. article, go to LINK:
This was my 29th article published in CEOWORLD. Previously, the editor advised that I can use “Featured in the CEOWORLD magazine” and the CEOWORLD “Logo” on my website and add CEOWORLD magazine in my LinkedIn profile’s “Experience Section” as an “Opinion Columnist.” and authority in the field. For a library of my past article published by CEOWORLD, see https://ceoworld.biz/author/robert-adelson/
With more than 12.4+ million-page views, CEOWORLD magazine is the world’s leading business magazine written strictly for CEOs,CTOs, COOs, CIOs, CTO/CSOs, senior management executives, business leaders, and high net worth individuals worldwide.
It is my hope that this article on eliminating taxation on all or most of the appreciation on early stage or high growth stock a CEO or other C-level or senior executive receives as part of your executive compensation package may be of benefit to those currently or in the future negotiating their executive compensation and equity package, or renegotiating in a retention situation. If you or any colleague of yours has a need in this area, please do reach out to me at email@example.com.