2022/09/19
Incentive stock options (ISOs): typically taxed only on sale of shares.
Non-qualifying stock options (NSOs): typically taxed both on exercise and on sale of shares.
Restricted stock units (RSUs): type of equity grant where you own shares automatically if certain conditions are met (like vesting). More likely to be issued by larger/older companies. Taxed on vesting.
Stock options: A type of equity compensation that gives you the option to buy (“exercise”) shares at the “strike price” listed on your equity grant. Startups tend to issue stock options.
Fair market value (FMV): The FMV is the established value of what one share of common stock is worth as of a specific date. It’s typically determined by a 409A valuation
Post-termination exercise period (PTEP): Period of time your company gives you to exercise your vested options after you leave. Typically 90 days.
83(b) election: A tax form that you file if you choose to exercise your options early. If you’re permitted to exercise early and you decide to do it, you need to work with your company to file an 83(b) election with the IRS and make sure to follow all their rules.
409A valuation: An assessment of the FMV of a private company’s common stock. Must be performed by a qualified, independent valuation provider.