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In private companies, you often are unable to sell your shares because it requires board approval. The AMT trap, in oversimplified terms, is being wealthy enoug
by rpedela 6y ago
In private companies, you often are unable to sell your shares because it requires board approval. The AMT trap, in oversimplified terms, is being wealthy enough on paper, due to shares, to trigger AMT but unable to sell shares to cover the taxes.
- eanzenberg 6y agoIt’s a great problem to have. I’d love to have that problem. Give me that problem. You choose how much to purchase and wait for the wealth to materialize. I’m sure most people would love to have this kind of problem. Gimme. Gimme.
- rpedela 6y agoGrass is always greener... It can be a tough decision, but I have been through it enough times that I don't really care what the options package is. I just want one if everyone else gets one, but otherwise I look at salary and benefits. Because most likely the shares will become worthless, and if not, I most likely won't be around to see the liquidation event. I never exercise unless I know for a fact a liquidation event is coming.
- eanzenberg 6y agoThats different than being an uber early employee and knowing your private equity is worth a ton. I also wouldn’t exercise random startup shares unless they were real cheap and I wanted to roll the dice. The uber example is clearer. I’d always rather be a paper millionaire than not a millionaire at all. At least you have the choice to exercise some if you leave, or all if you can afford the loans. Also uber is a bad example since people DID sell their private shares as there was enough of a marketplace for it.