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Comment by s1artibartfast | Hacker News Reader

That's not how tax law works. When you found a company you buy founder's stock, with an initial valuation filed with the IRS and this is the value until the next qualified valuation event, where it may change. Share prices of $0.01 to $0.00001 are common. I guarantee that $0.001 was the founders share price filed with the IRS at company formation.

https://gust.com/launch/blog/how-to-value-startup-stock

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Sure, $0.001 is the value on paper (and under current law). The point is, it's exploitable (let's say I'm an Apple engineer, I start a new company and get a wink wink from some friends in high places who want to invest in my company doing X. I put in my founders stock into IRA in return for first dibs on placement for the investor - 1 year later company has valuation, my stock has risen many %%. Sure, I'm technically doing everything legally, but practically it's somewhat equivalent to insider trading + avoids taxes).

I would personally ban non-public investments in Roth IRAs. That way a debate about market value doesn't have to happen.

Many times, $0.001 turns out to be too high a value for startup shares -- a lot of startup shares end up being worth zero.

seems like the far better solution is banning IRA investments in your own company. This is the current law.

If you make a smart or lucky in somebody else's company, bitcoin, or whatever, it isn't an exploit, it is the point.

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