On mobile so apologies for formatting. Has anyone dealt with something like this? I'm not sure what my options are.
stock option exercise timing. I've been dealing with this for about 5 months now and the situation isn't improving.
I have already consulted briefly with a lawyer but got conflicting advice.
What are the risks if I pursue this? What's the likely timeline?
I've dealt with this before.
I ended up filing with the appropriate government agency, which cost about $4-8 but saved me a lot more in the long run.
I work in this industry and unfortunately this is very common. The good news is that when people actually push back with legal representation, companies usually settle just saying.
Jumping in because we just closed our Series B and three engineers came to me with stock option tax questions in the same week. The timing is relevant because we are in the middle of tax filing season and people are seeing the consequences of last year’s exercise decisions.
One engineer exercised 15,000 ISOs in June 2025 when the FMV was $12 per share (strike price $0.80). The spread of $11.20 per share times 15,000 shares equals $168,000 in AMT preference income. She had no idea until her CPA told her she owes approximately $44,500 in AMT for 2025 on top of her regular tax liability. She is scrambling to set up a payment plan with the IRS using Form 9465 because she does not have the cash.
The lesson from watching this unfold: if you are exercising ISOs with a large spread, you need to either (a) do a same-day sale (disqualifying disposition, taxed as ordinary income, but at least you have the cash), (b) file Form 6251 with estimated payments throughout the year so you are not blindsided in April, or (c) spread exercises across multiple tax years to stay below the AMT exemption threshold, which is $85,700 for single filers in 2026. My strong recommendation is to run the AMT calculation with a CPA before exercising anything over $50,000 in spread value.