Equity compensation / $3,600 to $7,200

RSUs, ISOs and the tax bill nobody warned you about.

Your company gave you a stock plan and a 40 page PDF. Nobody gave you a schedule. We read the PDF, build the schedule, and show you the real number behind the fear.

Book a 45 minute intro
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The four kinds

Four letters, four different tax bills.

  • RSUs

    Taxed as wages the day they vest, whether you sell or not. The company usually withholds 22%. If you are in the 35% bracket, the gap shows up next April. We fix the withholding or set aside the difference.

  • ISOs

    No regular tax at exercise, but the spread counts for the alternative minimum tax. Hold a year past exercise and two past grant for capital gains rates. The AMT trap is real and it is avoidable with a schedule.

  • NSOs

    The spread at exercise is wages, period. Simpler than ISOs and usually worse. The decision is when to exercise relative to your other income and the expiration date, which companies are quiet about.

  • ESPP

    A 15% discount is a 17.6% return on the day of purchase. Almost everyone should max it. Almost everyone should sell on a plan rather than let it pile up next to the RSUs in the same stock.

Plain words

The AMT, explained once.

The alternative minimum tax is a second tax calculation that runs alongside the regular one. You pay whichever is higher. Most people never meet it. People who exercise incentive stock options meet it all the time, because the difference between the exercise price and the market price that day counts as income for the AMT even though you have not sold a share.

Exercise $400,000 of spread in one year and you can owe six figures in April on stock you still hold. If the stock then falls, you paid real tax on paper gains. This is the story behind most of the equity disasters you have read about.

The fix is dull: exercise in slices, sized each year to the amount of spread that fits under your AMT exemption, and use the credit in later years. Daniel builds that slice schedule for every ISO client. It goes on the one page plan next to the sell schedule for the RSUs.

The engagement

What we actually do.

  1. Read every grant agreement and the plan document. Write the vest schedule, exercise windows and expiration dates on one calendar.
  2. Measure the concentration. If one stock is more than 15% of your net worth, we set a target and a quarterly sell amount to reach it.
  3. Model the tax by year: regular, AMT, state, the net investment income tax. Pick which lots to sell and when.
  4. Fix the withholding on RSU vests so April stops being a surprise.
  5. Coordinate with your CPA, or with Daniel's return review if you do not have one.
  6. Handle the events: a tender offer, an IPO lockup, a job change with unvested shares, a 10b5-1 plan if you are an insider.

Most engagements run twelve to twenty four months, until the concentration is at target and the sell schedule runs itself. Many clients then move to retirement planning, where the schedule keeps going inside the bigger plan. The tax planning work is folded into this engagement.

Book a 45 minute intro
Fee
$3,600 to $7,200 for the engagement, flat, set by the number of grants and events. Billed half at the start and half at the plan.
Typical client
An engineer, product lead or physician at a public or late stage private company, 30 to 50, with 30% or more of net worth in one stock.
Timeline
Schedule and tax model in four weeks. Then quarterly check ins through the sell plan.
Not included
Trading the shares for you (we do not take custody of company stock), tax return preparation, legal advice on a 10b5-1 plan.