Case Studies

Problem

A hi-tech marketing manager for a startup business received more than 16,000 low-cost stock options and faced a huge increase in taxable income if the options were exercised. The company was approached by a private equity group wishing to buyout the stock options of several employees. These stock options had been granted at a very low price (under $0.20 each) and were now valued at more than $14 each. Considering the potential impact on his already high six-figure income, he was unsure about what to do or if he could mitigate his tax costs.

Tax Wealth Network Solution

Using our Tax Clarity Tax Planning Module, we completed a Pre-Sale Tax & Income Analysis and showed him how to employ a multi-year stock sale with a special provision of the Tax Code that favors qualified small hi-tech businesses. Utilizing this strategy, he was able to reduce his overall income by nearly $120,000 and his income tax by nearly $50,000.