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Anyone with a six-figure sale is nearly certain to end up owing more than they withhold (assuming you sell, which you probably should).

If a company hasn't IPO'ed, an 83(b) election may also make sense.

The IPO is a taxable event. You’re taxed at the IPO price, and your company should withhold shares based on that price.

After whatever lockup you have some fraction of shares remaining. When you sell those and if the price is greater than the IPO price then you have capital gains on whatever shares you still hold.

You still owe tax from the IPO. My point is the company will withhold shares from you, but you might need to pay more if they underwitheld for the IPO. This has nothing to do with your capital gains from selling your remaining shares.

The IPO is not a taxable event.

Parent is presumably referring to RSU releases at IPO which are taxable. You are correct that options and shares are unaffected.


It's income, which in the USA is generally taxable.

You only pay tax when you sell your shares or exercise options.

IMO an 83b election only makes sense if you have negligible exercise costs. Otherwise, it's a lot of risk to take on an exit that may never profitably happen.

Eh, it generally can make sense if you can get QSBS, as that is so favorable.

All said, the better companies offer partial recourse loans to early exercise.

My point is that most employees at most startups are going to join after the earliest days, with option grants that will have exercise prices that entail a 4- or 5-figure outlay to exercise. Maybe this is just the east coast, but I've never worked at a company that makes loans to allow for early exercise. I'm not sure I know anyone who has had this situation. Even early exercise is relatively rare here.

This is days later, so not sure if you'll see this, but could you explain what QSBS has to do with it?

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