Ask HN: How to Abandon Stock of Startup? | Hacker News Reader

Ask HN: How to Abandon Stock of Startup?

7 pointszenlikethat9 comments

Hi HN,

I am looking to abandon the stock of a startup I worked at (purchased from exercising ISOs when I left) so I can claim a loss on my taxes. I am willing to accept a complete loss on these shares and offered to give them back to the company for $0.

However, the company wrote me back that "the shares are not transferable to a third party without the prior consent of the Board of Directors and the Company cannot authorize or otherwise agree to your request to surrender them for zero value".

I contacted the portal where our shares are managed to ask if they can process an abandonment and they just said to talk to the company.

Any options for me here or am I hosed?

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You may be able to donate them to a charity, which the Board might be more likely to approve since it doesn’t imply the company is worthless. Maybe someone on the board is on the board of a charity, too.

Also just a quick note that this would be capital “gains” and there’s a limit on how much you can offset income taxes with capital losses, at least in the US. If you’re offsetting other capital gains, then no issues.

Yea I have gains to offset, good idea to try and donate to charity thanks

  without the prior consent of the Board of Directors

I can't really answer, but have you tried getting in touch with anyone on the board? As a shareholder you should be able to attend the shareholder meetings. You might inquire about being invited to the next shareholder meeting and go from there.

I haven't, I was trying to work it out with the finance department and leadership first but they will not buy back the stock OR take it back for free.

The problem for offering them back at $0 is that if they try and raise money again that will be a hard discussion to have with a potential investor who would also try and determine what an appropriate price would be for that stock. When you exercised your ISO you had a price, you might actually get further by trying to petition them to sell them back at that same price.

They refused that too unfortunately.

Can you sell them back to the company? For example if you sold them for 1 cent the company has the right of first refusal and if they refuse I believe the sale can still go through.

I wonder if they incur tax obligations if they report the value as >0 on their Section 409a and someone essentially gifts them the shares.

I don't have an answer to this question, but I'd love to do the same with some shares i foolishly exercised a few years back.

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