[ares2012]

I think you mean an 83b election, which is what applies to income tax treatments for vesting schedules. You should be issuing everyone on your team stock options which do not require an 83b election. You can't issue incentive stock options (ISOs) to non-US citizens but you can issue them non-qualified options (NSOs).

83b elections only become a problem for people where you grant them actual shares which they vest in over time which is only common for founders.

Note that a 409a valuation helps you figure out the strike price to set for those options but can be expensive. Most very early stage companies will have the board set the strike price until the company has gotten far enough to justify a 409a valuation.

[karanjassar]

Yes, I meant 83b :-).

> 83b elections only become a problem for people where you grant them actual shares which they vest in over time which is only common for founders.

All equity we are planning to issue has a vesting schedule attached. My understanding is that it's uncommon it issue equity that doesn't have a vesting schedule attached and it's true for all employees and not just founders. Vesting is indeed at the core of this problem.

Regarding the board setting the strike price -> Someone on the board 'must have some reasonable experience' setting the strike price for it to be reasonable for IRS to believe. I'm the only one on the board so far so unfortunately for us, we don't have anyone with this experience.

[mjmahone17]

> 83b elections only become a problem for people where you grant them actual shares which they vest in over time which is only common for founders.

This has been common amongst companies like Google and Facebook, even pre-IPO. Don't most startups provide RSUs and similar? Options seem like a weird incentive, mostly because I have to have capital to pay for them before I receive them.