Do you exercise all your stocks when quitting a startup

Salesforce switchr
Jul 11 8 Comments

How much money is justified? I have a bunch of vested “paper money” stocks. How much of it should I buy before quitting? How long do I have to decide

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TOP 8 Comments
  • AMD nyKI57
    Depends on your confidence in the future of the startup. If the cash required to exercise is small, might be worth a gamble. The thing to look out would be the FMV at exercise. If the spread between FMV and strike price is large, AMT comes into picture. AMT might not be a big deal with the new tax law though.
    Jul 11 3
    • Salesforce switchr
      OP
      Sorry, what new tax law ?
      Jul 11
    • Accenture tydwo
      for all the newbies. what's FMV and AMT please?
      Jul 11
    • AMD nyKI57
      FMV - Fair Market Value (Common stock valuation at the time of exercise), AMT - Alternate minimum tax.

      Starting 2018, the AMT deductions and phase outs were eased, so AMT is less applicable to most people. Your AMT situation really depends on a lot of individual factors. Might be worth consulting a tax expert before making your decision.
      Jul 11
  • Adobe mercury10
    Yeah, see what the FMV is, because I think you need to pay taxes on the difference in FMV vs what you pay to exercise.

    This is super case by case. For me, I exercised when leaving my last place because I could afford to, and the FMV wasn't much different from the exercise price. I'm okay with losing the money I paid to exercise and I'd regret it forever if the company ended up going somewhere later.
    Jul 11 0
  • Red Hat / Eng johnniewic
    Are those options or RSUs? If options I’d suggest checking with a lawyer, as you’d be taxed even for just owning them.
    Jul 11 2
    • Salesforce switchr
      OP
      Oh you don’t get taxed for owning RSUs? I think these are options. Because I know there’s an exercise price. With RSUs I’m assuming I wouldn’t have to pay anything out of pocket
      Jul 11
    • Google Eibwlwuw78
      With RSUs, a portion is automatically deducted in taxes when they vest. So you do pay taxes, but not “out of pocket”.
      Jul 11