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.


Introducing the ability to transfer interests

Admins can now easily transfer interests from one holder to another in the event of a secondary transaction or sale of shares.

Transfer interests and maintain a record of the transaction

When transferring an interest, you’ll need to input the recipient, date of transfer, price, quantity, reason, and add any acceptance documents and additional fields for issuing the new interest. Only outstanding and vested units can be transferred to other interest holders. 

Once an interest transfer is completed, your cap table is automatically updated and transfer events are appended to the interest history so there is a clear record of the transaction.

Get started

Start an interest transfer by selecting items on the Interests and Interest Types page, then clicking the Actions button. Only full-administrative users can transfer interests. For more information, visit our support site.

New 409A dashboard with a valuation ledger

The new dashboard provides you visibility into valuations completed by Carta, the board, or investors.

Streamline valuations and audits

The new dashboard streamlines valuations and audits by allowing you to:

  • Request a 409A valuation from Carta and see the status of the request
  • Gain visibility into the latest valuation, including the per unit value and expiration date
  • Record an investor or board determined valuation and upload the valuation document
  • Gain visibility into all previously completed or recorded valuations in the valuation ledger

Get started

Admins can find the new dashboard under the Valuations tab. For more information, visit our support site.

Waterfall modeling enhancements

You can now include any option grants in the waterfall and customize vesting conditions.

Easily model future scenarios with more options for waterfall modeling

When running a waterfall, Rights and Preferences now include option grants so that they can participate in the waterfall and you can determine their payout. Option grants participate in the waterfall based on their strike price or per unit threshold value.

Additionally, you can now set the exit date when running a waterfall and choose a vesting treatment to either include all interests fully vested or only vested quantities as of exit date. Setting an exit date in the future and choosing the vesting treatment allows you to more accurately model future scenarios.

Get Started

You can find these enhancements under the Valuations tab > Exit modeling. For more information, visit our support site.

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.


 

Introducing the ability to retract interests

Admins can now retract any interests that were issued incorrectly.

Ensure accuracy when issuing interests

Mistakes can happen when issuing interests, like inputting the incorrect contact information or interest details for the holder. 

Now, if you have already issued the interest but the holder has not accepted it yet, you can retract the interest. Retracting the interest revokes the holder’s task to accept it and changes the holder sharing status to ‘unshared’ so that you can make any corrections.

Get started

If you need to retract an interest, go to the interests ledger on the Interests & Interest Types page. Then, select the dropdown on the right side of the ledger for a single interest. Once you’ve made any corrections, be sure to re-share the interest with the holder as this does not happen automatically.

For more information, visit our support site.

New Acceptance Agreements tab

Admins can now easily add acceptance agreements before sharing the interest with the holder.

Easily manage acceptance agreements

It is now easier and more clear to add and gain visibility into acceptance agreements on interests. In the new Acceptance Agreements tab in an interest’s details, you can now select from the documents you’ve uploaded the ones you want the interest holder to sign when accepting the interest. Moving acceptance agreements into their own tab also makes it clear which documents a holder agreed to, or will agree to, during the acceptance of an interest. 

Get started

You can continue to upload files to the Documents tab. In the Acceptance Agreements tab, select from the uploaded documents the ones you want to add to the interest so that it is presented to the holder during the acceptance process. 

For more information, visit our support site.

New account dashboard page

The new account dashboard page provides an overview of all entities in one place.

Gain visibility across multiple entities

The new dashboard page provides a view into each entity and the recent activities so that you can always keep a pulse on what’s happening with interests across entities. Quickly learn more about recent activities by clicking into them.

Get started

Login to Carta to see the new account dashboard page.

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