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I dunno if the basis is $0.
From the IRS's view, is it that these options are being bought back?
Or that the employee is exercising the option and selling the resulting shares?
And if they're selling the resulting shares, are they being exercised and sold at Fair Market Value?
Maybe either way winds up being essentially the same answer from a tax perspective...
Upon further research, I think that it's probably income as the company would technically be cancelling the options immediately prior and paying the employee, so it's income. I'll continue to ask around and welcome other comments.

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