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Ask HN: Will AMT repeal lead to mass exodus of employees from unicorns?
Many employees at private unicorns like Uber are “stuck” working there, because if they leave, they need to exercise their options within 90 days, but then owe AMT on the “paper value” increase in the spread between the current “value” of their newly granted stock and the strike price on their exercised options.
Companies like Uber may not go public for years. But the AMT tax bill for employees who leave could be millions of dollars, due the year they exercise their options (within 90 days of leaving the company). Since the stock is effectively illiquid, this would bankrupt employees or force them into debt. So the best option becomes to stay at their company. Thus, they are “stuck” there.
Will repealing the AMT tax result in all these “stuck” employees leaving their companies? What effect will that have on the unicorns, and what downstream effects might it trigger in VC funding?
Perhaps it will result in more IPOs?