My startup just raised a series B and now exercising my ISOs has real tax implications, need help thinking through timing
I joined a startup two years ago, got ISOs, past the cliff, about 40% vested. Company just raised a series B and based on the new 409A there's a meaningful gap between my strike price and current FMV which is great on paper but exercising now means real money plus potential AMT.
Trying to think through timing. Exercise now while the spread is smaller than it might be later? Wait until I leave and deal with the 90 day crunch? And someone at work mentioned QSBS... something about excluding up to $10M in capital gains if you hold qualified small business stock for five years. If that applies to exercised ISOs then starting that clock earlier might actually make the upfront cost worth it even though it hurts right now.
Has anyone actually gone through this decision? What did you do and what do you wish someone had told you?
Posted Feb 19, 2026, 3:10 PM UTC