3 ms·
Beware of taxes! If you exercise at least 1 full year (366 days) before the company sells you pay capital gains tax (currently 15%) instead of full income tax (
by happyboredom 15y ago
Beware of taxes! If you exercise at least 1 full year (366 days) before the company sells you pay capital gains tax (currently 15%) instead of full income tax (could be ~35%). I did not exercise my options early. Consequently, I coughed up over one-third of my cash to Uncle Sam in the form of taxes & withholding.
- lrm242 15y agoExercising options in a company with no market to sell those shares is a recipe for bankruptcy. Exercising an option is a taxable event, regardless of whether you sell the result shares to receive cash. If you try to anticipate an exit by exercising options early to minimize tax, you might find yourself with a hefty tax bill and no way to pay it should that exit not actually materialize. When dealing with stock options the best advice is, IMO, always to exercise and immediate sell enough of the stock to cover the result tax hit.