Dear @pk ,
I sincerely appreciate your time and effort in answering my questions before. As mentioned in my responses, my Singaporean startup equity fully vested in 2021, but I have not yet taken possession of the shares. I am now working on converting the equity to shares and hold them for at least a year to qualify for long-term capital gains treatment before selling.
I have a couple of follow-up questions based on recent discussions with the Singaporean startup:
Tax on Share Purchase: In next month or two, when I convert my equity to shares—essentially purchasing all of them for US$1.00 (a discounted rate due to my prior role and vested equity)—would this trigger a taxable event? A Singaporean broker advised me to verify this, stating that I might owe taxes based on the fair market value of the shares. Is this correct? I understand that I will be taxed when I sell or cash out the shares, but I’m unsure how I could be taxed upon purchase, especially since this does not generate income.
Tax Treatment for Pre-U.S. Work: I am currently on an H1B visa and not supposed to work for any employer other than the one sponsoring this visa (and I have not). This equity was awarded for my work at the startup from October 2017 to mid-August 2018, before I moved to the U.S. in late August 2018. Per the terms, the equity then vested over the next three years, even though I was no longer employed by the startup. How should I report this in my U.S. tax return to indicate that it stems from work performed before I came to the U.S.? Should I attach my contract agreement with the startup as supporting documentation?
I appreciate your guidance and look forward to your insights.
Best regards,
RD
