Taxes on Stock payouts

[travnole]

So let's say I own class c units for a private company.

They go public and the units become real money.

If I cash it all out , how much do I lose in taxes? Do I pay right when I cash out or do I pay them the following year?
Posted from Rivals Mobile

 

[Gonolz]

Originally posted by travnole:
So let's say I own class c units for a private company.

They go public and the units become real money.

If I cash it all out , how much do I lose in taxes? Do I pay right when I cash out or do I pay them the following year?

Posted from Rivals Mobile

What you cash them out for minus what you paid for them is subject to tax. If you have held them for more than a year, it is capital gains tax, probably subject to 20% tax. If you are high income, it may be subject to a little more tax. You will pay the following year when you file your tax return, but you might want to pay estimated income taxes when you cash out if it is a lot to avoid penalties.

I just play a tax guy on TV, so you might want to ask a real SeaPA.

 

[Lemon Thrower]

Originally posted by Gonolz:
I just play a tax guy on TV, so you might want to ask a real SeaPA.

this is you, right?

 

[LT4PLY]

Originally posted by travnole:
So let's say I own class c units for a private company.

They go public and the units become real money.

If I cash it all out , how much do I lose in taxes? Do I pay right when I cash out or do I pay them the following year?
Posted from Rivals Mobile

The stock is 'real money' regardless. You either paid for them with money after taxes or the company gave them to you and you were taxed as income on their value at the time. Either of those numbers (what you paid or what they were valued at) is the initial price.

Sell them for less and you take a loss. More and you have a realized gain.

 

[Banditking]

initial price = cost basis.

If you cash out, you can counter the gain by selling other stocks at a loss (you can then rebuy similar class stocks immediately if you feel your position in that industry is good) at a dollar per dollar level.

Also, I think it is subject to the same ordinary income rules with respect to payouts. Meaning, if your AGI is low, you won't pay taxes on it (I think, not 100% sure about that).

 

[Gonolz]

Originally posted by Lemon Thrower:

Originally posted by Gonolz:

I just play a tax guy on TV, so you might want to ask a real SeaPA.

this is you, right?

Yep. You jelly, bro, because I'm a superstar? Not just anybody can rock the Statue of Liberty sign and twirl that income tax sign like there's no tomorrow.

 

[More Kirk Less Spock]

This is worth reading.

https://blog.wealthfront.com/improving-tax-results-stock-options-restricted-stock-grants/