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It used to be common to loan the employee the money to purchase the stock. This avoids both the tax and early termination problems.



Well this is exactly what we are doing! In our case however we are probably going to sequentially forgive the debt, which would look like real income and as long as we space it out the tax burden is slow. All of the transactions are paper anyway so this also keeps our cash flow the same.

What good is equity as compensation if you have to purchase the stock after all?!


A loan of the exercise price + 40% to cover taxes sounds like the best of all worlds to me.




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