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Would I be paying tax as if I'd made capital gains in the amount of the delta between the strike price and the stock's value today?

>> Yes, assuming you have not early exercised. This sucks.

Would the stock's value today be based on the company's valuation at the most recent round of funding?

>> Yes, the 409A valuation, which is generally ~30% of the valuation you hear about on TechCrunch for Series B-C companies. Investors received preferred stock. You have common stock.

If the company goes on to raise more VC funding, would I be liable in future years for the 'capital gains' on this stock?

>> Only when you sell it. Same as public stocks -- if you buy Twitter stock, and sell it in 5 years after it's gone up 2x, you have to pay cap gains only once after you sell.

If the company went on to fail, would I be entitled to tax breaks for loss of stock?

>> Not sure. The rules around this are pretty complex. Ask a lawyer.




Would I be paying tax as if I'd made capital gains in the amount of the delta between the strike price and the stock's value today? >> Yes, assuming you have not early exercised. This sucks.

>>>> So, if the company hasn't raised funding since I was offered my options, would I have zero tax liability for exercising my vested options?


No, the board can still increase the fmv value for two reasons:

1 - the company has executed well and increased their value;

2 - to ratchet golden handcuffs tighter




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