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If you’re hitting ATM you’re doing extremely well for yourself and are privileged.
by eanzenberg 6y ago
If you’re hitting ATM you’re doing extremely well for yourself and are privileged.
- mehrdadn 6y agoYou seem to be unfamiliar with the AMT trap? I would recommend Googling it. It impacts people who are not well-off prior to exercising their options by triggering AMT upon exercise.
- eanzenberg 6y agoRight, but why exercise the option without next selling it? If you’re quitting, that’s a risk. And AMT is applied on the gains. So your strike is $1, valuation currently at $100 and you pay tax on the $99 gain. Unless it’s Theranos that valuation wont go back to $1, so yes, you’re privileged.
- mehrdadn 6y agoYou need to read up on the issue. Links to get you started: - https://www.holloway.com/g/equity-compensation/sections/the-amt-trap https://www.holloway.com/g/equity-compensation/sections/the-... - https://thestartuplawblog.com/immediately-exercisable-isos-the-problems/ https://thestartuplawblog.com/immediately-exercisable-isos-t...
- eanzenberg 6y agoIt’s a great problem to have. I’d love to have that problem. Give me that problem. You choose how much to purchase and wait for the wealth to materialize. I’m sure most people would love to have this kind of problem. Gimme. Gimme.
- mehrdadn 6y agoOK. You posted this unsubstantive comment 3 times...
- rpedela 6y agoIn private companies, you often are unable to sell your shares because it requires board approval. The AMT trap, in oversimplified terms, is being wealthy enough on paper, due to shares, to trigger AMT but unable to sell shares to cover the taxes.
- eanzenberg 6y agoIt’s a great problem to have. I’d love to have that problem. Give me that problem. You choose how much to purchase and wait for the wealth to materialize. I’m sure most people would love to have this kind of problem. Gimme. Gimme.
- rpedela 6y agoGrass is always greener... It can be a tough decision, but I have been through it enough times that I don't really care what the options package is. I just want one if everyone else gets one, but otherwise I look at salary and benefits. Because most likely the shares will become worthless, and if not, I most likely won't be around to see the liquidation event. I never exercise unless I know for a fact a liquidation event is coming.
- eanzenberg 6y agoThats different than being an uber early employee and knowing your private equity is worth a ton. I also wouldn’t exercise random startup shares unless they were real cheap and I wanted to roll the dice. The uber example is clearer. I’d always rather be a paper millionaire than not a millionaire at all. At least you have the choice to exercise some if you leave, or all if you can afford the loans. Also uber is a bad example since people DID sell their private shares as there was enough of a marketplace for it.
- UncleMeat 6y agoBecause you literally can’t sell it. This is why we people get stuck at startups. You must immediately exercise upon leaving but cannot sell, incurring huge tax bills but zero cash in your wallet. If you are rich you can afford it. If you aren’t, you are forced to take zero.
- eanzenberg 6y agoIt’s a great problem to have. I’d love to have that problem. Give me that problem. You choose how much to purchase and wait for the wealth to materialize. I’m sure most people would love to have this kind of problem. Gimme. Gimme.
- dang 6y agoBetween your posting this comment three times and ignoring the many requests at https://news.ycombinator.com/item?id=24335771 https://news.ycombinator.com/item?id=24335771, I think this is enough and have banned your account. If you change your mind, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll use the site as intended.
- imtringued 6y agoThis entire subthread is about "people who are doing well" getting shafted.