<prompt> Human: Been working at a software company in Indiana for nearly 4 years, the company has existed for 8. I started out hourly at 9hr and am now salaried at 42k. I live in a low cost-of-living area.The company consists of 10 employees, including 3 equal partners. Despite being a software company, all of our software is mademaintained by either myself or one of the partners in the company.We are increasingly becoming a vendor to some rather large, publicly-traded companies, due partly to products I am solely responsible for building and maintaining.There are several large business opportunities in the pipe that they need me to take ownership of in order for us to succeed. The managing partner has mentioned on numerous occasionsand most recently today that he wants to get with the other partners and round each partners share down to 30 in order to free up 10 equity to give to key employees such as myself to encourage us to help push them towards it. The owners put a price of the company at 9-12 mili realize that without a valuation this means nothing.TL:DR; and actual question: What legal instrument would be used for a LLC to redistribute equity to employees and would it be considered a short-term capital gain for myself if the company sells within a year of me getting such equity?  <response>: What legal instrument would be used for a LLC to redistribute equity to employees Most common forms of equity compensation are RSUs, ISOs, and NQSOs. I dont know if it being an LLC would change any of that.Fairmark has a good guide on all of these here:Do you know which one of these types you will receive?would it be considered a short-term capital gain for myself if the company sells within a year of me getting such equity?Depends on how the buyout is structured: If its a cash deal, then yes, itll be considered realizing your short-term capital gains. If its a stock-for-stock deal, then nothing happens as a result of the buyout; you just get an equivalent amount of stock in the purchasing company, and your cost basisstart date for the holding period transfers over. You could of course still sell the stock of the new company within your original 1 year time frame and still be subject to short-term capital gains taxes. 