Summary
When David Gold founded ProSavvy, an e-procurement company, he created a stock-option plan for employees and contractors who provided services to the company for little or no cost. Four years later, an auditor advised Gold to send 1099s to all his contractors who had exercised their stock options. Because of Internal Revenue Service regulations and the company's increased value, the exercise of the stock options was treated like ordinary income even though the stock could not be sold.
I had to send those 1099s - it was the law, Gold said. That was a lesson that started me down this path.See the full content of this document
Extract
Businesses Stifled by Taxes?
Gold's path involves changing the tax laws when equity (stock shares) in a company is offered to employees or contractors in exchange for dollar compensation. Capital is always an issue for early-stage companies with plans for growth; it's not like the owners have pots of gold sitting around, he said. But committed employees will take compensation, from a minority percentage to sometim...
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