[toomuchtodo]

Would it be fair to say that, if one was set on exercising, that they do so for whatever amount has vested after their one year cliff, and then exercise the remainder (13/48-48/48) each month over their 4 year earn out in order to have as much of the stock covered under long term capital gains tax when it comes time to sell?

Hypothetically speaking, of course.

[lgcoleman]

This assumes your shares are worth more than your exercise price. :)

In order to get long-term capital gain treatment you will need to hold the shares for 1 year + 1 day. And more than 2 years from the grant date (this part usually isn't an issue).

By exercising every month after the 1 year cliff you essentially dollar-cost averaging your purchases. You might also want to use a similar strategy when it comes time to sell.

Also keep in mind that the long term capital gain rate is currently 20% plus 3.8% net investment income tax. (Again this if federal only).

[toomuchtodo]

Thank you for following up. Off to get my 409A valuation docs from HR :-P