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Subject:   ISO Question
Date:   Sun, 18 Dec 2005
From:   Joe

Michael,

I was with a privately held company in 2000. I joined in January and left in September. I had exercised all my options by June, 2000 and filed Section 83(b) elections for all of them. After I left, the company repurchased all of my ISO shares. The company is still privately held.

Do I need to do anything as a next step? Am I still on the hook for any taxes on gains, should the company go public, since the IRS only has my 83(b) elections and nothing else from me?

Thanks,
Joe

Answer

Date:   Mon, 09 Jan 2006

Hello Joe,

From your explanation, the company repurchased your unvested shares at the option price. You should have reported the sale on your 2000 income tax return, but the statute of limitations has expired and there was no gain or loss on the transaction.

Since you no longer owned the shares after 2000, you have no tax exposure if the company is sold or goes public.

Good luck!

Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.