What is equity-based compensation?
Equity-based compensation can trigger taxable income to employees when equity interests are granted , vested and/or exercised. For example, if an employee exercises a nonqualified stock option and the exercise price is $5 per share and at the time of exercise the fair market value of a share is $10, the employee has taxable income of $5 per share. In another example, if an employee is awarded restricted stock and the right to the restricted stock vests, the fair market value of the stock may be taxable income to the employee upon vesting.
Equity-based compensation is complex. If you are unsure whether or not an employee should be taxed on any such compensation, you should consult your own tax advisor or legal counsel.
How is equity based compensation reported in Justworks?
Please tell us if we need to report taxable income for any of your employees related to equity-based compensation. You can do so in the End of Year Resource Center, using the End of Year form, by December 14th, 2018.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.