6 ms·

I'm more familiar with traditional retail options, but I'm confused. I understand why the employees would want a loan - they need money to buy the shares requi

I'm more familiar with traditional retail options, but I'm confused. I understand why the employees would want a loan - they need money to buy the shares required to exercise the loan - and I guess they can't do it through a normal broker? If the employees Exercise-to-sell-to-cover or Exercise-to-sell they should be fine right because they would have closed the loan? This would explain why so many took the loan but so few of the layoffs were affected. Is the only issue the ones that didn't Exercise-to-sell? I understand that tax will need to be paid but I'm not sure what benefit they'd have would be? Unless, its because the capital gains + loan rate < income tax?

chris11 4y ago
It's short term capital gains vs long term. If you don't exercise and just sell short term capital gains tax applies. If you exercise ISOs and hold long enough you pay AMT, which can be refundable, and LTCG when you sell the shares.
- throwaway92394 4y ago
  What happens if they waive the loan? Does it count as LTCG + the income tax on the loan amount?
  - chris11 4y ago
    I'm not sure what exactly would happen, but forgiven debt is usually taxable.
s1artibartfast 4y ago
Bolt isn't public so there is no sale option. You have to pay to exercise, pay taxes, and pray for a sale option some future date.
- JumpCrisscross 4y ago
  > Bolt isn't public so there is no sale option Private shares are actively traded. Bolt chose to restrict its employees from being able to sell.
  - throwaway92394 4y ago
    Forgive me if this is a dumb question - Assuming you're an employee with a relatively small number of shares (in terms of company control) - what's the point of shares if you can't sell them? Just _in case_ you can sell them later? Some type of dividend/profit sharing (which seems unlikely for a startup)?
    - s1artibartfast 4y ago
      Yes, the main value is that maybe you can sell them someday. This is why it is incredibly stupid that the IRS makes you pay taxes when you get them.

chris11 4y ago

It's short term capital gains vs long term. If you don't exercise and just sell short term capital gains tax applies. If you exercise ISOs and hold long enough you pay AMT, which can be refundable, and LTCG when you sell the shares.

throwaway92394 4y ago
What happens if they waive the loan? Does it count as LTCG + the income tax on the loan amount?
- chris11 4y ago
  I'm not sure what exactly would happen, but forgiven debt is usually taxable.

s1artibartfast 4y ago

Bolt isn't public so there is no sale option. You have to pay to exercise, pay taxes, and pray for a sale option some future date.

JumpCrisscross 4y ago
> Bolt isn't public so there is no sale option Private shares are actively traded. Bolt chose to restrict its employees from being able to sell.
- throwaway92394 4y ago
  Forgive me if this is a dumb question - Assuming you're an employee with a relatively small number of shares (in terms of company control) - what's the point of shares if you can't sell them? Just _in case_ you can sell them later? Some type of dividend/profit sharing (which seems unlikely for a startup)?
  - s1artibartfast 4y ago
    Yes, the main value is that maybe you can sell them someday. This is why it is incredibly stupid that the IRS makes you pay taxes when you get them.