I was released by my company and I had to purchase my ISO's within 60 days of leaving the company or lose them. The issue is to purchase them would mean around a $1.2m AMT & State Tax Bill next year. As the company is private they determine if and when they buyback your shares. I want to sell them all now but can't, so if I purchase them all and between now and next year the company don't buy them back I have a Tax Bill that I cannot pay.

Where do I stand when I have no control when I can sell my shares? when I need to sell my shares to pay my tax bill? It will mean selling my house, cars and still not have enough funds to pay my AMT & State Tax thus it will probably bankrupt me?

  • You should only owe taxes once you sell those shares. And then you would have the money. – Aganju Apr 17 '19 at 3:23
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    @Aganju, you are mistaken. AMT is owed when the options are exercy. – prl Apr 17 '19 at 5:56
  • I don’t know of any way to avoid the AMT other than to not exercise the options. If the shares aren’t liquid, you could make an argument that the quoted value isn’t the actual value, but I don’t know how viable that argument would be. – prl Apr 17 '19 at 6:02
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    For such huge amounts of money - congratulations! - you need the finest paid expert advice available. (And be sure to carefully seek 2 or 3 opinions.) – Fattie Apr 17 '19 at 10:36

To repeat a standard disclaimer but this is something you should approach a tax consultant with. You already seem to have an estimate of $1.2M (which I'm not sure how you have). The best reference sites are still approximations. Also note, that you pay the higher of AMT and your usual income tax.

As for possibly selling your stocks, you could look into secondary markets to sell - SharesPost, EquityZen, for ex.

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    There are companies that specialize in exactly this. They will lend you the money to pay your taxes in exchange for some portion of the revenue when/if you sell your shares. If you can't get such a company interested, it's probably because it's not worth it to exercise the options. – David Schwartz Apr 17 '19 at 18:15
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    @DavidSchwartz - your comment may be a good answer to this question. – TTT Apr 18 '19 at 1:18

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