Frequently Asked Questions About Equity Compensation

When should I exercise my ISOs?

There is no single answer. The right timing depends on the current value of your shares, exercise price, alternative minimum tax exposure, liquidity, expected holding period, and your broader financial plan. We model different scenarios before an exercise decision is made.

What happens when my RSUs vest?

RSUs generally create ordinary taxable income when they vest and the shares are delivered. The taxable amount is typically based on the value of the shares at that time. After vesting, we help evaluate whether to hold or sell the shares, whether additional tax payments may be necessary, and how the position fits within your overall portfolio and diversification strategy.

How much company stock is too much to own?

There is no single percentage that is appropriate for every investor. Concentration risk becomes more significant when your investments, compensation, and career are all tied to the same company. We evaluate the size of the position relative to your overall portfolio, tax situation, liquidity needs, future equity awards, and financial goals. Depending on the circumstances, strategies may include staged sales, tax loss harvesting, charitable giving, exchange funds, and other diversification approaches.

What should I do before an IPO or liquidity event?

Planning before the event can be significantly more valuable than reacting afterward. We help evaluate taxes, exercise decisions, concentration risk, liquidity needs, diversification, and how the proceeds should fit into your broader financial plan.

What is the AMT risk when exercising ISOs?

Exercising incentive stock options can create Alternative Minimum Tax exposure even when you have not sold the shares or received any cash. The difference between the exercise price and the stock's fair market value at exercise may be included in AMT income. We can model different exercise amounts and timing strategies to evaluate potential AMT exposure, available liquidity, and the potential benefit of exercising shares across multiple tax years.

Can you help with private company stock before there is a market for it?

Yes. Private company equity often requires planning around exercise decisions, taxes, tender offers, secondary transactions, potential acquisitions, and future liquidity. We help evaluate those decisions before liquidity becomes available.

Do you work with my CPA or tax professional?

Yes. Equity compensation decisions often have significant tax consequences. We coordinate with your tax professional so investment, tax, and financial planning decisions are considered together.