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it wouldn't be that expensive to buy them I hope you are taking into consideration the capital gains tax when it comes to the difference between strike price a
by hesdeadjim 10y ago
it wouldn't be that expensive to buy them
I hope you are taking into consideration the capital gains tax when it comes to the difference between strike price and the current fair market value of the stock. If a company is growing fast or takes on money, this can change alot in even a year.
The IRS doesn't care that you may not be able to actually recognize that gain because you cannot actually sell the stock, it's considered a gain nonetheless and you will owe tax on it.
I have been in a situation where the FMV of my stock changed by 10x in the span of a year and by the time I could have actually bought any stock the tax bill would have bankrupted me.
- stockoptionsta 10y agoYou're talking about AMT, right? You're right, there are situations when people can't exercise their options simply because of the high tax bill. In this particular case, with the company I'm talking about I am fairly certain (simply because I'm doing the same calculations for myself) that if he exercised his options it would not trigger AMT.
- hesdeadjim 10y agoOnly ISO options trigger AMT. NQSO triggers regular income tax on exercise for spread between strike price and FMV. As far as I'm aware almost option grants are NQSO because ISOs have a bunch of other limitations that make them annoying or untenable depending on the grant size.