That happened because you exercised and didn't sell?
Also, we may be hearing many stories like that after the Bitcoin bubble when IRS goes through the records more carefully. Always remember to take profits the instant you make those profits, put some of that cash aside for yours and IRS's sake. Always.
No, that is nothing like bitcoin. Stock options get exercised at fair market value and you immediately owe taxes on the paper profits, even if you never get a cashout. For example, if your strike is 10 cents and when you finally exercise the FMV of the company is $1 per share, you have 90 cents of profit per share even if the company is still private.
Bitcoin is a commodity, if you buy at $10k and the value drops to $5k, you have straight losses. You don’t owe taxes on paper gains unlike the totally ridiculous and insane situation with stock options. The government blows.
I meant for people that bought low and then traded around the top. If you switched BTC to, say, ETH around the peak - you created taxable income. Even if you've lost almost everything since then.
A buy, full ride up and down to the same level, followed by a sell shouldn't be taxable income.
Golden rule is if you exercise sell enough immediately to pay off the tax burden. If you have a lockout get it written into your contract that you can sell them to another private holder (e.g another employee, investor). It's legitimate for a private company to want a lockout, they don't want external influence in a company but most will allow internal if you get it in contract.
Also, we may be hearing many stories like that after the Bitcoin bubble when IRS goes through the records more carefully. Always remember to take profits the instant you make those profits, put some of that cash aside for yours and IRS's sake. Always.