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The company I work for has given stock option grants to all the employee's. The options are incentive options, and vest over a 4 year period. The company is still privately held, and the revenues are still under $10M/year. They are offering to let us exercise them early if we want at the price that the option is at the offer ($.10/share). My question is what are the tax implications of exercising them early? Until the company goes public, or gets bought-out the options are essentially worthless, but the prospects for doing so are pretty good. I'm considering just purchasing the vested options, and holding them for over a year (to get them in the long-term capital gains bracket). Hopefully, in that time the company will have gone public (or get bought) Is this a good strategy, or am I way off base?


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