
Ask HN: Can I get some help for a potential options financing product - optfin
I am looking into building a product that will finance options for startup employees in exchange for some of the profit during a liquidation event.<p>You will not be expected to pay anything if the company goes under. You will only pay a cut of your profit if there is a liquidation event.<p>I am collecting data to validate my hypothesis that this will be a win-win situation (e.g. you will save a lot of money due to taxes if you exercise early) for both the company and the customers of the company. If you could fill out the form here: https:&#x2F;&#x2F;airtable.com&#x2F;shrebenwVzaeFzols, I would really appreciate it.<p>Thank you for taking the time out of your day to fill this out. Any feedback is welcome.
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deanmoriarty
When you say “you will not be expected to pay anything if the company goes
under”, did you miss “but consult a tax advisor” or were you accurate?

I ask because I entertained the possibility of accepting a similar deal in the
past, with a company that was offering a loan covering exercising and AMT
costs in exchange for ~50% of the equity upside, with “no downside” for me
(they would implement this by forgiving the loan). However, it turns out that
a forgiven loan is a very much taxable event for the IRS, so in the worst case
I would still have had to pay significant money (e.g. 30-40% of my forgiven
loan, since the forgiveness is taxed as regular income).

After crunching some numbers, I decided to come up with the exercise and AMT
money upfront myself. Hadn’t been for the loan forgiveness taxation, I would
have probably taken the deal, so if your idea is able to fix this, you might
be on to something.

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optfin
Very good point, will look into this.

Thanks for bringing it up!

