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Posted On: 05/16/2020 10:00:35 PM
Post# of 154916
Investment Warrants are not taxable!!!!
The taxation of an investment warrant is favorable. First off, a warrant issued in an investment transaction does not have to be priced at FMV, like a compensatory warrant. It can be issued for a penny a share, for example, even if the last 409A valuation of the company indicated that the FMV of the common was greater than a penny a share. And, if you ultimately exercise the warrant and there is a spread between the exercise price and the value of the shares you receive on exercise, you do not have to pay tax on the spread on exercise. The reason is that you purchased the warrant when you bought the underlying securities. It was a purchase transaction, not a compensatory transaction
The taxation of an investment warrant is favorable. First off, a warrant issued in an investment transaction does not have to be priced at FMV, like a compensatory warrant. It can be issued for a penny a share, for example, even if the last 409A valuation of the company indicated that the FMV of the common was greater than a penny a share. And, if you ultimately exercise the warrant and there is a spread between the exercise price and the value of the shares you receive on exercise, you do not have to pay tax on the spread on exercise. The reason is that you purchased the warrant when you bought the underlying securities. It was a purchase transaction, not a compensatory transaction
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