Legal Question in Business Law in California

Re: Transfer of equity

You are being fed (it seems) a large dose of BS. I cannot think of a situation where someone has a tax liability because of receiving stock, except for the possible income tax effect of accepting the stock at its then-current value as part of your current compensation, in which case it is simply part of your income.

If the amount involved is over, say, $10,000, you should consult a tax advisor who works for you. More likely than not, your entitlement to this stock interest is (at worst) compensation over a number of years, and at best it was not and is not now currently-taxable compensation. Sure, you may have a capital-gains tax liability if and when you sell it at a profit, but that is a happy future event and not a here-and-now problem.

My hunch is that you are being deterred from claiming a valuable prize by more-or-less phony assertions whose main purpose is to prevent you from claiming a valuable prize. Your solution is to take the entire issue to a CPA, lawyer or tax specialist (and I mean a business tax person, not a storefront tax-return preparer) who can dissect the owners' claim that taking the stock is not a good deal for you. My guess is that you are being flimflammed.

Re: Transfer of equity

What they've told you sounds like nonsense, but confirm that. First, go talk to a tax professional to get legitimate tax advice. Then, if you need to take legal action to enforce their promise to give you an interest in the company, as I suspect you will, feel free to contact me.

Re: Transfer of equity

There are scenarios in which your employers may be correct, that there would be tax consequences from your taking a 10% equity interest in the company. And there may be ways to construct an agreement that avoids any immediate tax consequence (e.g., a written agreement which provides for a bonus as a percentage of profits, etc.). You should consult with your tax advisor on this issue.

Otherwise, any agreement you do reach with your employers should be in writing. Your "trusting them" without a written agreement is just asking for a lawsuit down the road.