[ldd-]

Sounds like you're in the same boat as everyone else in your round, right? It's simply a function of the timing of the deal (less than a year since you invested, apparently) and the deal structure (cash vs. stock).

Stock inherently requires the acquired company to share the risk of the deal.

If the stock goes down further, you should be able to claim the loss on your taxes when you sell, which should mean you would need more than a 52% total decline to go in the red on the deal.

Are you an accredited investor? If not, you may have some legal outs to demand your money back, but you'd need to chat with a lawyer. If you were to pursue that route, though, you'd likely ruin any credibility to make future investments in other companies.

Kinda stinks that there's the gap between tax law and SEC regs timing, though. Good luck with the investment!

[beagle3]

> Sounds like you're in the same boat as everyone else in your round, right?

5% of the investment is accounted for by US tax payers. The rest are not, so I'm not in the same boat.

> If the stock goes down further, you should be able to claim the loss on your taxes when you sell, which should mean you would need more than a 52% total decline to go in the red on the deal.

No. The tax event is on the grant, not a capital gain (therefore capital loss does not cancel). Furthermore, if I fall under AMT (very likely), I can't deduct anything.

> Are you an accredited investor?

Yes.

[ldd-]

>No. The tax event is on the grant, not capital gain (therefore capital loss does not cancel). Furthermore, if I fall under AMT (very likely), I can't deduct anything.

Ooph . . . sorry. However, just so I understand, if your shares were to rise above the transaction price, would you not be subject to capital gains tax on the gain? It would seem a bit misaligned if you could be taxed on gains but not benefit from losses (however, I wouldn't put that past the codes and that still wouldn't account for AMT issues).

Good luck with it!

[beagle3]

> if your shares were to rise above the transaction price, would you not be subject to capital gains tax on the gain?

Yes. The way the IRS views it, I was given a an ordinary income bonus which consisted of new shares, and which was valued at $Z during the grant (and taxed as such, at that second). From now on, I own shares, so capital treatment goes into the future. If the stocks drop, I will have capital loss when I sell them -- but I need some other capital gain to net against.