[foysavas]

For educational purposes only and not legal advice:

This incentive plan is structured as restricted stock units that are paid out as shares upon an IPO or trade sale (called in the doc, the "Initial Vesting Event").

Tax laws in the U.S. will impose ordinary income tax on the fair market value of such shares when they are issued, which for clarity, is at the Initial Vesting Event.

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For the record, I am a bit peeved that the word "tax" is being used to describe aspects of this plan, as it may make looking up actually startup tax matters harder.

[mahyarm]

It's a good thing to know. Many employees who wanted to move on from companies find their stock options a financial penalty vs a financial benefit because of things like AMT.

Now if there was a way to do this and get the long term capital gains tax rate vs. the ordinary tax rate. I can't think of any without paying the IRS before hand to buy your options or doing some sort of strange cyclical loan program with investors.