On-demand educational content for employees with Tax Advisory

What's new

Employees who have access to Carta Tax Advisory through their employer now have access to on-demand educational content in their Carta portfolio. As an employee, you have the ability to re-watch your company’s recorded webinar, as well as view chapters of key concepts about your equity. The video chapters cover topics such as exercising your option, selling your options and other important topics.


Who this affects

This feature is available to employees who have access to Carta Tax Advisory through their employer. Employees will be able to view their company's recorded webinar once it has been completed.

Where to find it

As an employee, navigate to the Learn section of the Tax Advice page in your Carta portfolio. If you have any additional questions, please schedule a session with an Equity Tax Advisor.

Dilution Report (Public Markets)

What’s new? 

Public company administrators can now run a Dilution Report to help them calculate their company’s diluted earnings per share (EPS). The Dilution Report will contain the simple and weighted average of common stock outstanding (WASO), the number of incremental shares, the average trading price for common shares, and supporting information for all calculations. This feature will simplify diluted EPS calculations and help public companies meet their diluted EPS reporting requirement for their quarterly income statements.  

How does it work?

To calculate diluted EPS, an Issuer will need the WASO and shares outstanding (new common shares issued at conversion - repurchased shares) for the reporting period in question. The Issuer will calculate its own net income, preferred dividends, and after-tax cost of interest. 

Note: * denotes fields not provided by Carta

After logging into their Carta accounts, public company administrators can navigate to the Financial Reporting section of their profile to generate a new Dilution Report for a desired reporting period. Dilution reports are only available for periods that begin on or after an Issuer’s IPO date.


After the report is generated, the administrator can download an Excel file which includes calculated values for simple and weighted average of common shares outstanding, the number of incremental shares, the average trading price for common shares, and supporting information. The file also includes an “Errors” tab to flag any data issues that should be resolved to produce an accurate report.

Simplify diluted earnings per share calculations to meet quarterly reporting requirements for public companies

With the Dilution Report, public company administrators can:

  • Save time and reduce the work required to calculate WASO and shares outstanding to meet public company reporting requirements;
  • Customize the diluted EPS reporting period as needed;
  • Use Carta’s calculations to verify their own calculations as a sanity check; and
  • Understand if there are any data discrepancies that need to be addressed. 


Start using the Dilution Report now!

Do you need additional help in using the Dilution Report? Refer to this support article for more information. For further assistance, reach out to Carta’s Financial Reporting team at 718@carta.com

Wire Instructions Update

What’s New

We have made UI improvements to our Wire Instructions for online wire exercises. The new UI better highlights the amount, timeline, and considerations for completing the transfer. The updates include:

  • User and exercise specific details such as grant, company, option holder, date, and amount.
  • Clearer instructions for the bank on how to handle intermediary fees with specific SWIFT payment instructions. 
  • Approval and reminder emails now show the last day for Carta to receive funds, so the exercise can be complete.

Who this affects

All international users who are exercising options via online wire. 

How it works

The updated Wire Instructions will be available in the same places as before (Tasks view, PDF, Exercise Progress view). You can see the new templates here:

Tasks view


PDF

Exercise Progress view

Email communication

Both Approval and Reminder emails show the date for Carta to receive funds.

Timing

  • Available on all online wire exercises starting 11/30/2022

Additional Resources

Support Article: Exercising Via Online Wire

Communication Center (Public Markets)

What's new?

Public company administrators can now utilize the brand new Communication Center to send secure communications to stakeholders in the company’s equity plan managed on Carta. This feature allows public companies to create and send timely communications to equity plan members in bulk. Recipients can be selected by relationship type and other filters to further customize the message’s distribution list. In addition, the Communication Center dashboard allows company administrators to view sent and drafted messages, and see which stakeholders have viewed a communication. 

Examples of communications include, but are not limited to: instructions on how stakeholders can manage their equity at Carta, employee stock purchase plan (ESPP) offerings, upcoming trading windows, and updated disclosures.

How does this work?

Permissioned company administrators may access the Communication Center. Before sending any messages, company administrators should check that the company’s Stakeholder Ledger is up-to-date to ensure messages are sent to the correct individuals. At minimum, an individual’s Relationship, Contact Email, and Officer Code (if applicable) should be updated.

Once these steps are completed, company administrators can proceed to the Communication Center dashboard (found under the Employee tab of the main navigation toolbar).

Here, company administrators with Company Editor or Legal Administrator roles can compose, review, and send secure messages with or without PDF attachments. They can also filter for previously sent and drafted messages. 

When choosing who to send a communication to, the Company Editor or Legal Administrator may send bulk messages by Relationship Type (e.g., Employee, Ex-Employee, Advisor), and then also filter recipient lists by Officer Code, the employee stock purchasing plan (ESPP) an individual is a member of, or the security type(s) held by each stakeholder. 

Company administrators will have the opportunity to review the communication, save it as a draft, and reconfirm the recipients before sending the message. After sending the message, stakeholders will receive an email notification that they received the secure message. They must log in to their Carta accounts to view the message, and messages on the Carta platform may not be forwarded to an external email account.

Company administrators who can view the Communication Center dashboard can monitor which stakeholders have viewed the communication.  

Send secure messages and archive them safely in a centralized location with Carta’s Communication Center. 

The Communication Center allows public company administrators to: 

  • Craft and send secure communications with or without PDF attachments in bulk to stakeholders within their public equity plans; 
  • Easily create recipient lists by relationship type and other optional filters, removing the need to maintain multiple distribution lists manually;
  • Quickly filter recipient lists of sent communications by who has or has not viewed the communication; and
  • Review and archive communications to remain compliant with recordkeeping and reporting laws; 

Start using the Communication Center now!

Need help with the Communication Center? Refer to this support article for detailed instructions on how to manage, view, and send out your next secure message. 

SEC Rule 144 Affiliate Workflow Updates (Public Markets)

What’s new? 

Carta improved how public company administrators can manage and designate equity plan stakeholders as Rule 144 Affiliates. Designating stakeholders as Affiliates ensures that their trade orders get reviewed before execution through a separate SEC Rule 144 due diligence workflow and that those trades are properly captured for Form 144 inclusion. Company administrators can also now easily access and review a filtered list of Rule 144 Affiliates from their Company Summary page. 

The management of Rule 144 Affiliate status has been separated from the Officer Code workflow to simplify this process and to ensure trading blackout periods for stakeholders with certain Officer Code(s) will not be impacted by one’s Rule 144 Affiliate status.

How does it work?

Company administrators can update Rule 144 Affiliate status by clicking on “Manage Employees” on the Company Summary page. 

From there, administrators can click on each stakeholder’s record and view their current Rule 144 Affiliate status. Administrators can also track the Effective Date of when a stakeholder was first marked as an Affiliate without leveraging Officer Codes.

To designate an individual as a Rule 144 Affiliate, administrators can check the box within the Update Stakeholder flow:

For enhanced security, Carta put controls in place to prevent stakeholders from inadvertently being removed as an Affiliate. Please contact Carta Support to help remove a stakeholder’s Rule 144 Affiliate status.

Easily manage, review, and designate public equity plan stakeholders as Rule 144 Affiliates to ensure trading compliance via an improved workflow.

With the improved Rule 144 Affiliate workflow, company administrators can:

  • Easily manage, review, and designate equity plan stakeholders as Rule 144 Affiliates;
  • Be assured that Affiliate trades go through the proper reviews and are included on Form 144; and
  • Set blackout trading periods for certain Officer Code(s) without an impact to a stakeholder’s Rule 144 Affiliate status.

Start using the improved Rule 144 Affiliate status workflow now!

Do you want to update Rule 144 Affiliate status for individual stakeholders or in bulk? Refer to this support article for more information. 


Introducing Session Types for Tax Advisory


What's new

Employees who have access to Carta Tax Advisory through their employer may now choose from up to four different tax advisory session types. This aims to provide transparency and flexibility so you can have the conversation that's right for you. 

Who this affects

US-based employees subscribed to Carta Tax Advisory through their employer

How it works

Scheduling a session

Log in to your  Carta employee account, navigate to the Tax advice tab.

From there, click on "Book a free session" to browse different session types. 

Once you're on the session type selection page, you'll see a brief outline on how to schedule and a selection of three to four different session types. 

Select the session type that's right for you and click "Schedule free session" to book a time with a tax advisor. 

If you're not quite sure where to start, we recommend starting with the "Understand equity basics" session type to learn about your equity and taxes at a high level.

Note: The "Discuss tender offer participation" session type only appears if your company is currently undergoing a tender offer. 

Preparing for a session

Session types: Discuss tender offer participation | Create tax scenarios

Once you've scheduled a time to speak with a tax advisor, you'll be prompted to upload a few documents. Tax advisors will create personalized tax scenarios using this information so you can have the most accurate tax picture. 

If you don't have these documents on hand now, you can skip this step for later. However, you must upload documents at least 24 hours before your session so advisors have enough time to prepare. 

After uploading your documents, you're ready for your session. 

You'll receive a calendar invite with a zoom link to attend your session at your scheduled time. You can also see this information in your tax advice tab in Carta, with the option to reschedule or cancel using the "View details" button. 

Session types: Ask a quick question | Understand equity basics

Once you've scheduled a time to speak with a tax advisor, there's nothing else you need to prepare ahead of your session.

You'll receive a calendar invite with a zoom link to attend your session at your scheduled time. You can also see this information in your tax advice tab in Carta, with the option to reschedule or cancel using the "View details" button. 



New Hire Onboarding for Tax Advisory

What's new

New hire onboarding allows new hires to access their Carta account before they receive and accept their equity grant. By creating a stakeholder record for the employee, employees receive an email to register for a Carta account. This grants them access to Carta Tax Advisory.

If you do not add new hires they will need to wait to accept their equity grant in order to access Carta resources, which can take several months to approve and issue. 

New employees often have questions about their equity as soon as they join a company, Carta Tax Advisory gives them access to dedicated 1:1 support from equity tax experts from day 1 to help them understand their equity packages. 

Who does this affect?

Companies subscribed to Carta Tax Advisory

US-based employees (new hires) at companies subscribed to Carta Tax Advisory

How can I give new hires access to their Carta account?

Important notes before starting: 

  1. The new hire onboarding process only applies to companies subscribed to Carta Tax Advisory
  2. Tax advisory sessions are only available to US citizens or residents
  3. Adding an employee into Carta as a stakeholder provides them access to Carta services like Carta Tax Advisory. Ensure you only add employees you intend to issue equity to.

The Stakeholder ledger allows users with Company editor or Legal administrator permissions to view and modify information for a person that holds multiple securities across the company 

Navigate to Stakeholders > All Stakeholders


Under the Manage Stakeholders drop-down, admins can add stakeholders individually or in bulk

Individually add stakeholders

Select “Add stakeholder” in the Manage stakeholders dropdown list



A modal will appear requesting information about the stakeholder

Required fields:

  • First name
  • Last name
  • Relationship (i.e. employee)
  • Relationship effective date
  • Add and save an address 

Tax ID, Employee ID, Payroll ID, and other address fields can be input as available, but are not required before equity grant issuance

Bulk add stakeholders

Select Bulk add stakeholders from the Manage stakeholders dropdown


Download the template spreadsheet to import stakeholders’ information, save, and upload the modified file. Carta will run a check on the data entered before saving the changes


Note: Admins should not add new columns or move columns in this sheet. They must use the template as is


Required columns: 

  • First name
  • Last name
  • Relationship (i.e. employee)
  • Relationship effective date (MM/DD/YYYY)
  • Country (3 digit) 
  • State (2 digit)

After the updated xslx sheet is uploaded, click “Submit changes” and a confirmation modal will appear

Confirm to complete stakeholder creation


Revenue Procedure 2002-50 (Company Tax and Compliance)

What's new?

Carta has made it easier for private companies running a tender offer to invoke IRS Revenue Procedure 2002-50, which is applicable to certain transactions involving the exercise of options and sale of the resulting securities during a transaction on the same day. This procedure allows for the exclusion of those same day option sales from Form 1099-B reporting if certain conditions are met. For example, this may apply to cashless exercised options in connection with a secondary transaction on Carta where there is no capital gain (Sale Price = Fair Market Value).

How does it work?

To make a Revenue Procedure 2002-50 election on an applicable transaction, company administrators may request an Officer Certificate template from Carta to complete and get signed by a Company Officer who has the authority to make decisions on the tax treatment of cashless exercises in a tender offer.

Fig 1: Sample of an Officer Certificate

The completed form can then be returned to Carta, who will then trigger the Revenue Procedure. 

Any employee whose transactions on Carta were excluded from 1099-B reporting as a result of Revenue Procedure 2002-50 will, if applicable, receive a supplemental Disclosure Statement detailing the fees and gross proceeds on cashless exercises of options so they can complete their Form 8949 reporting. Compensatory income from cashless exercises is reported as ordinary income on the W-2.  

This statement will be delivered electronically by February 15th of the following year in the same manner as all other tax documents on Carta. No such statement will be generated if the employee was not charged any fees by Carta.

Fig 2: Sample of IRS Revenue Procedure 2002-50 Disclosure Statement

The company administrator can also generate a new report of all the Disclosure Statements issued after the transaction. The Revenue Procedure Disclosure Statements Report will assist in auditing transactions ahead of the tax season to ensure completeness and accuracy for tax filing purposes. The report can be found under your Reports section in Carta.   

Fig 3: Sample of Disclosure Statements Report

Make tax reporting easier for same-day option exercises and sales during a tender offer by invoking Revenue Procedure 2002-50

The Revenue Procedure feature will:

  • Remove an employee’s burden to reconcile their Form 1099-B and Form W-2 when determining their Taxable Income after a same day option exercise and sale
  • Reduce the risk of paying capital gains tax on proceeds that were already taxed as ordinary income

Reach out to Carta to get the process started

Is your company running a tender offer? If so, the Revenue Procedure 2002-50 will be enabled on the platform after returning a completed and signed Officer Certificate to Carta. Companies who ran a tender offer previously in 2022 can retroactively upload the appropriate Officer Certificate to benefit from this feature until the end of 2022. Please contact your CSM or Liquidity representative for more information.


Updated Form 3921 Dashboard with Consolidated 3921 Statements (Company Tax & Compliance)

What's new?

After reviewing customer feedback, Carta made several user experience enhancements in the Form 3921 dashboard.

Carta now aggregates individual Form 3921’s for ISO exercises into consolidated statements for ease of use. Individual Copy B’s are still available to download if required. These statements will be available in participant portfolios when companies generate their 3921’s. 

The enhanced user experience also allows company stock administrators to download the Manage Stakeholder Details report to review all stakeholder records at once instead of in a paginated view within the Administrator Experience. Companies with 50+ stakeholders now have enhanced filter and sorting capabilities (e.g, select one or multiple years to download the Stakeholder details ledger) to better analyze historical data.

There is a new tab for “Exclude Transactions” for further flexibility if company administrators need to suppress reporting on individual option exercises. 

How does it work?

The new Form 3921 Dashboard is available now to all companies subscribed to this feature.

Reach out to Carta to get the process started

Reach out to your CSM to enable Form 3921 reporting if you are interested in upgrading your subscription. Public Market companies will have this enabled by default.


 

Payment Status Updates

What’s New

The Payment Status Updates on the Exercising workflow provides users a more accurate reflection of the status of their exercise during the money movement step of the exercise. Error messaging will now provide a single failure message clarifying what caused their exercise to become stuck during the money movement step of the exercise including errors around cancelation requests, bank account removal, and insufficient funds in the bank account.

Who this affects

All users exercising for private companies on Carta.

How it works

Today, users can view the status of their exercises in progress on the Holdings page and with the new Payment Status Update feature, these exercises will now display an ‘Error’ bubble beside the active step when the exercise gets stuck. Clicking the ‘View details’ button will navigate the user to the Exercise tab on the Option grant modal with user instructions to help resolve their stuck exercise. 

On the Exercise tab, error messaging will provide user action to contact their company admin through the Option grant modal’s Report Issue tab, to contact Carta Support through the chat, or update their bank account information on the Payment Information page. 


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