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Ask HN: I owe –$30k in back taxes or under water stock options. Any suggestions?
4 points by sbraford 33 days ago | hide | past | favorite | 4 comments
Hi,

tldr; got in early at a startup. exercised stock for ~$6k. got valued at ~$90k+, received a 1099 for that. company subsequently declined in value, now the stock might never be worth anything, but I owe $30k in taxes.

I was a very early contract hire at a startup right around pre-covid. Rode the unicorn wave to a $1b+ valuation. Good ARR. Everything going well. I exercised some stock options after they vested for around $6k. I did not pay any taxes at the time. It was through Carta. It never asked me to pay taxes on it or anything. At the end of the year, I get a surprise 1099 from the startup stating I made ~$90k+. Of course it was just paper stock gains (of private shares).

There was no way to sell the privately-held shares. I tried sites like Forge Global but there was zero market for these.

Subsequently, some things happened that I won't get into, but the company declined in value. I have no idea what it's worth today, but it's highly unlikely that it is worth anywhere near $1b anymore.

I am finally trying to figure out a better solution to the whole situation. I've contacted tax attorneys and CPAs. One guy said there _might_ be something I could do if I could show the current valuation of the company had declined starkly in value, compared to the value I was assessed the gains at.

Anyone in a similar boat?

I feel like this is an un-talked about thing in the startup world. It really sucks tbh.

Also note: I am not some big FAANG guy with $300k+ in TC that I pay taxes on each year. I won't say how much I make but it is a small fraction of that, so simply "depreciating" (?) or whatever the shares would not help me very much in this situation. That is--I hardly make enough in income each year to "save" in unpaid taxes if I take a giant loss from the shares, and hence just pay less in taxes going forward. I'm trying to figure out a way to reduce the $30k overall burden that I'm paying, not just reduce my future tax obligations. But maybe I'm missing something.




The income has already been realized. Talk with a tax professional, it will be worth the 1-2 hours of time and that cost. Worst case, they confirm the bad news and you need an installment plan.

You want a tax professional who is knowledgeable around this specific tax treatment. Get a referral from someone you trust if you can.

https://www.latimes.com/archives/la-xpm-2000-dec-22-fi-3328-... (Echos of 1999-2001)


Ouch. Yes, this sounds exactly like what happened to me.

I am on an installment plan. Have been paying this down for a bit now, but it is becoming an increasingly difficult financial burden to bear.

I have hired the one guy who said he might be able to do something to help for $295 for him to do some "research." I'm probably just screwed.


Check with https://grellas.com/contact-us/ if they can refer you to a tax professional they work with. They are skilled practitioners in the startup/venture space.

I am terribly sorry that you are having this experience, and hope you can find some relief.


Thank you so much.

I was trying to work with a local firm up here in the PNW but they have little experience in this area.

I now have an appointment for a consult with that firm you linked. You rock.




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