Equity Compensation 101
By Gary T. Moyer, April 11, 2000

Restricted Stock Purchase Plan

• Advantages

• Employee can make §83(b) election

• Employee generally entitled to capital gain treatment on resale of vested stock

• Company gets a wage deduction without paying cash wages

• Disadvantages

• See earlier slide.

• Employee has income but no cash with which to pay Uncle Sam. Note: Company may elect to bonus cash to employee to cover the taxes (and taxes on bonus and…)

• §83(b) election may invite audit by IRS

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