4 ms·

If I have a liquidity event at my startup, I'm going to be hit with this, right? Like many startup engineers, I've been taking less pay for shares for several

• medvezhenok 5y ago
  Unless you are forced to cash out, you can also liquidate ~250k of stock per year (or if options are available you can hedge your exposure and again extend the cash-out period over multiple years to spread out the tax impact)
• ovulator 5y ago
  If you got a $300k liquidity event. You will pay $3,500 in tax on it. If you worked at that job for 10 years at $30k less than normal, that is $7,600 a year that you didn't pay in federal income taxes on that missed income. Do the math, had you taken the income that would have been $76,000 in taxes over ten years vs $3,500 in taxes in one year.
  • snapetom 5y ago
    You've made up some convenient numbers here to create a strawman. If the liquidity is 500k, that's a $17.5k tax. I'm not going to stay at a job for 10 years for 30k less than market. That's a terrible decision. Most people would be looking after year 4, which is when options commonly fully vest. With my made up numbers, that's a $30.4k tax over four years versus a $17.5 tax over one year. My made up ratio is far less appealing than your made up ratio.