Is any tax due at the time of receipt?
July 23, 2001
Subject: NSOs for service providers
Date: Wed, 11 Oct 2000
Thanks for providing a great informational site.
I have a quick question. If a service provider, such as an Advisor or consultant, to an early stage (pre-venture capital, or just about to receive venture capital) company receives NSOs as a form a compensation, is there a tax event at the time of receipt or the time of exercise of the options? My understanding is that as long as there is no market for the options and therefore no readily ascertainable market value at the time of receipt, then the tax is paid at the time of exercise. Is that correct?
Date: 4 Dec 2000
Yes. There generally is no taxable income when non-qualified options are granted.