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“It was at that moment, staring at a bank account balance of zero, I was dead broke, but also a paper millionaire.”

-Rich / Poor Guy I once worked with

Welcome back to our month long series on employee equity:

  • Part 1: What’s a 409a Valuation (LAST WEEK)

  • Part 2: A Tech Worker's Guide to Exercising Equity & Optimizing Taxes (TODAY!)

  • Part 3: Getting RICH off Secondary Transactions (NEXT WEEK!)

Incentive stock options are a form of employee compensation. They can make tech workers fantastically wealthy if the company goes parabolic. However, they require employees to take a financial leap of faith, breaking out their checkbooks to both exercise their options and sometimes pay taxes on an asset which lacks a liquid market to “sell and cover” (a term we’ll cover below).

Here’s what we’ll get smarter on today for all of you folks out there who are compensated through equity in some form or another:

  • Tax Treatment for Different Forms of Equity

    • ISOs

      • What is Alternative Minimum tax?

      • Selling your ISOs

    • NSOs

    • RSUs

  • Early Exercise

As a reminder, paid readers get access to our compensation and equity benchmarking tool. Figure out how much equity you deserve!

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