It may not make sense but that's the tax law. You will owe tax on unrealized gain in this scenario -- as others have said it's due to AMT. Check with your accou

It may not make sense but that's the tax law. You will owe tax on unrealized gain in this scenario -- as others have said it's due to AMT. Check with your accountant. This is why 83(b) elections are so important. If your employer allows you to early exercise stock you can purchase your options immediately, prior to vesting, and pay tax at that time. Because your option purchase price will be equal to the market value (409A) the net tax will be $0. The 83(b) election is how you declare you've paid the tax at exercise.