Wouldn't the 1 year holding period start from the exercise date though? So if they exercise now and the company doesn't IPO for another year or more (which is likely given current market conditions), they'd meet both conditions as long as it's been 2+ years since grant?

Yes, the 1-year period starts from exercise date. I was just pointing out that many people mess this up around IPOs specifically. They exercise right before IPO thinking they'll qualify for LTCG rates, but then the combination of lockup periods and stock price volatility after lockup expires often leads them to sell before hitting that 1-year post-exercise mark. You're right that if OP exercises now and the company doesn't IPO for at least a year (and the grant was at least a year ago already), they'd likely meet both conditions. I just wanted to highlight this because it's a very common and expensive mistake I've seen multiple colleagues make.

Wow, I hadn't considered this! Our company does offer early exercise. So if I'm understanding right - I could exercise everything now (even unvested shares), file the 83(b), and basically avoid the whole AMT nightmare scenario if the FMV jumps later? What about if I leave the company before shares vest though? I'm guessing the company would repurchase the unvested shares at my original purchase price?

Exactly right! By exercising early while FMV is below strike price and filing the 83(b) election, you'd lock in your cost basis at $3.20/share with no immediate tax consequences. If the 409A valuation later jumps to $11.20, there's no additional tax event for you since you already own the shares. Yes, typically if you leave before vesting, the company has a right (sometimes obligation) to repurchase unvested shares at your original exercise price. So your downside risk is essentially limited to the cash you put in. The exact terms should be in your stock purchase agreement. Just make sure you understand the vesting acceleration terms in case of acquisition or IPO - some companies accelerate vesting in those scenarios, which could work in your favor. Also double-check that early exercise is still available and what the process looks like. Some companies restrict it during certain periods or require board approval above certain amounts.

This is incredibly thorough advice, thank you! I had no idea about Form 4340 - that sounds like it could be exactly what we need to track down where the payment actually went. The "unpostable transactions" suggestion is also something I never would have thought to ask about. You're right about the third-party processor issue too. Looking back at our bank statement, the withdrawal just says "US Treasury Tax Payment" but doesn't have any additional reference numbers or codes that might help track it. We definitely used TurboTax's direct bank account payment option, so there could be some kind of batching issue like you mentioned. I'm going to try calling again tomorrow morning with your specific suggestions - asking about unpostable transactions and requesting Form 4340. Hopefully that will finally give us some answers about where this payment ended up!

This is exactly the kind of professional insight we needed! I'm really grateful for the specific form numbers and department names - that gives us a clear roadmap instead of just calling the general IRS number and hoping for the best. The Identity Protection PIN angle is interesting - we hadn't considered that at all. My brother did receive an IP PIN letter earlier this year but I'm not sure if he used it correctly when filing through TurboTax. That could definitely explain why the payment went into suspense. Form 3911 sounds like it might be more effective than what we've been trying so far. When you say it "triggers the most thorough payment investigation process," roughly how long does that usually take in your experience? We're getting pretty anxious about the accumulating interest charges. One quick question - when we call and ask for "Accounts Management," is there a specific way we should phrase that request to make sure we get transferred to the right department? I want to make sure we don't get bounced around between different departments again. Thank you so much for taking the time to share your professional expertise with us!

Form 3911 investigations typically take 30-45 days for completion, but you'll usually get an initial response within 2-3 weeks acknowledging the investigation has started. The good news is that once they initiate the trace, any additional penalties and interest should be suspended while they research. For the IP PIN issue - if your brother received one but didn't use it when filing, that's almost certainly what caused the payment to go into suspense. TurboTax should have prompted him to enter it during the filing process, but it's easy to miss. You can verify if this was the issue by checking his online IRS account or calling to confirm his IP PIN status. When calling, say exactly this: "I need to speak with Accounts Management regarding a payment trace for an unlocated tax payment." If the first rep says they can handle it, politely insist that you specifically need Accounts Management because you need access to the detailed payment tracking systems. Most general customer service reps will transfer you without argument once you use that specific language. Also, make sure to mention the Form 3911 specifically when you get connected - this signals to the rep that you know the correct procedure and helps ensure they take the proper steps. Keep in mind that all penalties and interest accrued due to their processing error will be reversed once they locate the payment, so try not to stress too much about those charges accumulating.

The certified mail approach is actually brilliant! I hadn't thought of that, but it creates an official record that you provided all required documentation in an IRS-approved format. If they continue to delay payments after receiving your certified W-9, it becomes much harder for them to claim they're missing necessary tax information. You might also want to include a brief reference to IRS Publication 1281 in your cover letter, which outlines the requirements for backup withholding and specifically mentions that Form W-9 is the standard method for collecting taxpayer identification. Having that official source cited makes it clear you've done your homework and aren't just being difficult about their process.

This is really helpful advice! I never thought to ask for their security certifications before agreeing to use a company portal. The idea of getting written commitments about data retention and deletion is smart too - it gives you some legal protection if they mishandle your information later. I'm curious though - how did you go about requesting this documentation without seeming overly demanding? I worry that asking for too many security details might make me look difficult to work with, especially since I'm just a freelancer and not a big corporate client.

Ugh, I hadn't even thought about the state tax angle. We have owners in California, New York and Florida. Does anyone know how to handle this multi-state situation effectively?

Multi-state S-Corp taxation can be really tricky! For your situation with CA, NY, and FL owners, here's what you need to know: California typically requires the S-Corp to make composite payments for non-resident owners, OR the non-resident owners can elect to file their own CA returns. New York has similar composite payment options but the rules are different. Florida has no state income tax, so your FL owner is lucky there. The key is to check each state's specific S-Corp filing requirements early in the year. Some states have different deadlines for composite vs. individual estimated payments. You'll probably want to work with a multi-state tax specialist rather than trying to navigate this yourself - the penalties for getting it wrong can be substantial. I learned this the hard way with our multi-state partnership. Don't make the same mistake!

This is excellent advice! As someone who's new to S-Corp ownership, I hadn't even thought about the tracking aspect. Do you have any recommendations for specific accounting software that handles multi-owner S-Corp quarterly payment tracking well? Also, regarding those quarterly meetings you mentioned - do you typically have the S-Corp's accountant participate in those discussions, or is it more of an internal partner meeting? I'm wondering if having professional guidance during those quarterly reviews would be worth the extra cost.

This is such great advice about timing! I wish I had known about the "control" factor when I was dealing with a similar situation last year. I held onto donations for almost a week while figuring out how to set up the GoFundMe, and it definitely made my documentation more complicated. @Dana - your point about setting up the official fundraiser first is spot on. I learned this the hard way when my neighbor's medical bills started piling up and people just started Venmo-ing me money before I had anything organized. Would have saved so much paperwork hassle if I'd been proactive about it. For anyone reading this thread who might face this situation in the future: seriously consider just directing people to donate directly to established platforms from day one. The extra step of money flowing through your personal accounts creates tax complications that are totally avoidable with a little planning.

This is really solid advice about the spreadsheet documentation! I'm just starting to deal with a similar situation where I collected donations for a family whose mom was diagnosed with cancer. One question about the transfer timing - you mentioned doing it in chunks that match the Venmo deposits. Did you transfer each individual donation separately, or did you group similar amounts together? I have like 40+ small donations ranging from $25-200, so I'm wondering if transferring each one individually would be overkill or if that's actually what the IRS expects to see. Also, @Ethan, when you say keep donor names "if available" - what do you do when someone just sends money with no message or just their Venmo username? Should I be reaching out to ask people what the donation was for, or is it obvious enough from the context?