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Joined a company with a billion dollar evaluation. They IPO'd a year after I joined, just months after exercising options. The stock tanked. The AMT taxes will
by winrid 5y ago
Joined a company with a billion dollar evaluation. They IPO'd a year after I joined, just months after exercising options. The stock tanked.
The AMT taxes will likely be tens of thousands of dollars even if I don't sell.
- nrmitchi 5y agoTens of dollars? I'm assuming this is a typo of some sort
- winrid 5y agoHa, I wish! Corrected.
- tehlike 5y agoOh this is due to growth crash in the last few months? That sucks :(
- winrid 5y agoNah this was like 2021. It was an SPAC merger that tanked.
- devoutsalsa 5y agoI've had stock worth money in three different companies. Whenever I exercise, I immediately sell. I'm not willing to accept the downside risk, and I view the short term tax liability as the ultimate first world problem.
- winrid 5y agoYes, selling right away can be the way to go. I couldn't, however, until IPO. After IPO, similar competitors were doing very well, so I thought the company had a chance.
- dehrmann 5y agoYou didn't say if you're still above water. You won't likely owe any AMT if you close your position the same year that you exercise, though if it went down, you'll be carrying that loss for a while. If you suspected they'd tank, there was really no reason to exercise early. If an IPO looks eminent, you should probably wait a few months to exercise to see how the market reacts. Exercising early is more interesting when you're leaving or if the company is a sure thing, the IPO is a few years out, and you're chasing long-term capital gains.
- winrid 5y agoIn this case I was leaving right before the IPO and it looked like a sure thing, which obviously it never is. :) Yes, won't see returns for a while, if ever. Lottery tickets!
- bradlys 5y agoYep. Fun times. Funny to think the company is worth less now than when you joined. I wonder if it’ll get down to less than when I joined! Spend all that money on exercising. All that money on AMT. Should’ve sold at 7. All well. Lesson learned - don’t optimize tax strategy just divest.
- winrid 5y agoOh, hey Bradley! :)