What is Reddit's opinion of An Introduction to Stock and Options: for the Tech Entrepreneur or Startup Employee?

From 3.5 billion Reddit comments

There's a great Kindle book that details how stock options work for startups, including Restricted Stock.

While I am a fan of the little book, I have no affiliation with the author nor any referral from Amazon.

http://www.amazon.com/dp/B0055PQ4H8

Here's the relevant excerpt.

> The other good answer, and one that’s less well-known by first-timers, is to exercise immediately and file an 83(b). Let me explain. Remember that the employee is vesting an option to purchase Common Stock over a four year period? You might reasonably assume that that would mean that the employee couldn’t exercise their option before they had vested, but, startlingly, you’d be wrong. You see, the employee can pay to forward exercise their full options even on their first day at work, but instead of getting Common Stock they would receive Restricted Stock. Restricted Stock can be purchased back from a stockholder by the company at the price the stockholder paid for the stock. So if an employee quits (or is fired) holding Restricted Stock, the company will buy back all of that stock. But now instead of vesting options, the employee is vesting Restricted Stock into Common Stock. If our cunning employee exercised his stock soon after starting his job, he’d start off with 100% Restricted Stock, but on his one-year anniversary of employment, 25% of his Restricted Stock magically (with no paperwork required) would become Common Stock.

> There’s a trick here, and it’s an important one: to avoid a “bear trap”, you need to file an 83(b) Election. You see, normally when the Restricted Stock turns into Common Stock, you’d have to recognize as taxable income the price difference between the fair market value of Common and what you had paid for the Restricted. If the FMV of Common skyrockets (because your company is doing really well) you can get boned by AMT per the above...unless you tell the IRS that you want to recognize the whole event immediately, as if all of your Restricted Stock had already vested into Common Stock the day you received your Restricted Stock. That would mean you’d owe the IRS the difference between what you paid for your Restricted Stock and the FMV of Common Stock that same day...but the two are the same price! So the transaction is tax free. The important thing to remember is to file the form (called an 83(b)) through the company immediately and also with the IRS when you do your taxes at year-end.

There's far more details about the mechanisms and common practices when investing in companies and dealing with ownership. It's well worth the read if you are dealing with any kind of equity.