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I am assuming the company is Mrs. Goofy's employer.
You don't say whether these are "ISOs" (incentive stock options, a/k/a "qualified options" in the tax code,) or NSOs

I'm sorry, this would be easier if I gave enough information, wouldn't it? ;)

Yes, the company is Mrs. Goofy's employer. The options are ISO's.

For ISOs, it's a hit for AMT only, but it will make most people pay AMT, if they don't already.

We're already in AMT territory.

Now, it's a private company, so I don't know how you'd value it,

Yeah, that's the rub. The options are at $3. The most recent valuation is $9 (9 mos. ago) if certain markers and covenants were met. They haven't been.

Oh, and there's a recession, numbers are down, there's a management shakeup. Whispered conversations among two others in our situation: one is declaring $5 "value", the other isn't declaring anything. The company was buying shares back at $5, but has temporarily stopped. (Our 3rd party buyer is well aware of all the positive and the negative. We've been extremely forthright. We offered the shares to him at $6, doubling our strike price, and he jumped at it. I should also mention he's in a nominally allied business, a friend of ours, and is "friendly" with the CEO and other high mucks at the company, and probably has a net worth in the tens of millions, so this is not a big risk to him. The lack of liquidity and recession problems don't phase him at all.)

I have a call in to a tax attorney. Our accountant retired last year (and moved away), sold the business to someone we don't like, so we're floating a little bit at the moment, groping for advice. Any words would be appreciated.
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