Hacker News Reader

In private companies, you often are unable to sell your shares because it requires board approval. The AMT trap, in oversimplified terms, is being wealthy enough on paper, due to shares, to trigger AMT but unable to sell shares to cover the taxes.

You need to read up on the issue. Links to get you started:

- https://www.holloway.com/g/equity-compensation/sections/the-...

- https://thestartuplawblog.com/immediately-exercisable-isos-t...

Because you literally can’t sell it. This is why we people get stuck at startups. You must immediately exercise upon leaving but cannot sell, incurring huge tax bills but zero cash in your wallet.

If you are rich you can afford it. If you aren’t, you are forced to take zero.