There are tax implications with this description. This equity could be called compensation and taxed at the income tax rate instead of the capital gains rate, in the US. This could be the difference between 15% and 35% tax rates.
I prefer to think of it as "earning the right to have restrictions lifted from the equity they own". At the same time, their work is causing that equity to have more value (if they're doing it right!)
I am not a tax expert, or a lawyer, but this exact thing has been an issue for me personally for this tax season.
There are tax implications with this description. This equity could be called compensation and taxed at the income tax rate instead of the capital gains rate, in the US. This could be the difference between 15% and 35% tax rates.
I prefer to think of it as "earning the right to have restrictions lifted from the equity they own". At the same time, their work is causing that equity to have more value (if they're doing it right!)
I am not a tax expert, or a lawyer, but this exact thing has been an issue for me personally for this tax season.