Stock Option Special Tax Considerations

When working at an early-stage startup, certain tax strategies can unlock major financial advantages—if you plan ahead. Here are the core points from the lesson:

• Qualified Small Business Stock (QSBS) can allow up to $10 million or 10x your basis in tax-free capital gains if you meet specific conditions, like holding actual shares for five years and your company having under $50M in assets at grant
• Early exercise and filing an 83(b) election can start the QSBS clock early and lock in low tax values, but they come with financial commitment and risk if you leave before fully vesting
• The 83(b) election must be filed within 30 days of exercising options and doesn't accelerate the two-year holding clock required for qualified ISOs
• Only $100K worth of ISOs can vest annually for favorable tax treatment—going above that limit risks converting some to NSOs with different tax implications

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