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This may be being said elsewhere but I think the bigger problem is that you get taxed when buying options that are not liquid. I own a significant amount of a s
by throwaway2016a 10y ago
This may be being said elsewhere but I think the bigger problem is that you get taxed when buying options that are not liquid. I own a significant amount of a startup company and am fully vested but I can't exercise because of the tax bill.
- ThomPete 10y agoYou can. You just can't do long term capital gains.
- throwaway2016a 10y agoIt's my understanding I have to pay tax on the difference between excise price and fair market value for the year I exercise my option that year. And I've gotten conflicting tax advise on whether or not private investor rounds set a fair market value as far as the IRS is concerned. This article seems to be of the same opinion. Either way, if you can't do capital gains and you're still at the company no use wasting the money on buying in early.
- ThomPete 10y agoYeah but thats gets done right away in the process. It's the long term thats the problem because thats more like a loan.
- throwaway2016a 10y agoYes, but without the tax if you have a 90 day window when you leave it wouldn't be a big deal that the company isn't liquid yet, you might just buy the shares as an investment. My point is that because if the tax, buying the shares in this scenario (if the stock isn''t liquid enough) is not obtainable.
- ThomPete 10y agoThats true.