A worked example
Ninety days to decide on the options
Priya, 34, is leaving a startup with 50,000 vested incentive stock options at a $2 strike. The latest 409A puts the shares at $9, and she has 90 days to exercise or forfeit.
“What does exercising actually cost me — and would it be different if they were non-qualified?”
What the projection shows
The $100,000 of cash for shares she cannot sell, and the $350,000 spread that appears nowhere on her regular return and lands on the alternative minimum tax instead. What the AMT takes comes back as a credit in later years, which the table counts down. The same spread as an NSO is ordinary income immediately and never touches the AMT at all.
The planner arrives with this household already filled in. Change anything — the balances, the ages, the assumptions — and run it as yourself.
A projection under stated assumptions, not financial or tax advice.