Employees who buy stock in the financial services company for which they work, starting in a minority position and then acquiring additional shares over the years, face a couple of difficult hurdles.
First, they are buying the stock with after-tax money; second, they are buying stock not with the earnings or cash fiow of the company, but with their salaries.
Finally, buying nut a majority position means diverting nondeductible cash fiow to the exiting owner while also needing to replace the lost talent.
Cash will only stretch so far. Minimizing the tax impact, from the buyer's perspective, can really help to make ends meet.
First, they are buying the stock with after-tax money; second, they are buying stock not with the earnings or cash fiow of the company, but with their salaries.
Finally, buying nut a majority position means diverting nondeductible cash fiow to the exiting owner while also needing to replace the lost talent.
Cash will only stretch so far. Minimizing the tax impact, from the buyer's perspective, can really help to make ends meet.
