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While I totally understand the frustration with taxes, vesting rules, etc. the entire problem, IMO, comes from the lack of liquidity in these shares.

These are "realized" gains to the IRS, but unrealizable to the employee because there's no way to sell the shares. That leads to large tax bills only payable in cash, which you can't get by selling the shares.

There are solutions to provide this liquidity in the works: https://www.google.com/amp/s/amp.ft.com/content/d52b0487-b13...

As soon as these are real, most issues with stock option compensation go away.




> the entire problem, IMO, comes from the lack of liquidity in these shares

There's also the lockup period after an IPO during which a stock can be very liquid but employees are prohibited from selling.


That applies to all insiders, though. It's not specific to the employees.


I think that if we are expected to pay taxes there needs to be an immediate market to sell those shares at the taxable price. Would the IRS take the shares to pay the taxes? If not they shouldn’t be considered taxable until there is an exit.




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