Would I be paying tax as if I'd made capital gains in the amount of the delta between the strike price and the stock's value today? >> Yes, assuming you have n

Would I be paying tax as if I'd made capital gains in the amount of the delta between the strike price and the stock's value today? >> Yes, assuming you have not early exercised. This sucks. Would the stock's value today be based on the company's valuation at the most recent round of funding? >> Yes, the 409A valuation, which is generally ~30% of the valuation you hear about on TechCrunch for Series B-C companies. Investors received preferred stock. You have common stock. If the company goes on to raise more VC funding, would I be liable in future years for the 'capital gains' on this stock? >> Only when you sell it. Same as public stocks -- if you buy Twitter stock, and sell it in 5 years after it's gone up 2x, you have to pay cap gains only once after you sell. If the company went on to fail, would I be entitled to tax breaks for loss of stock? >> Not sure. The rules around this are pretty complex. Ask a lawyer.