[JumpCrisscross]

> worst outcome is I make no money; the best is that I keep 70% of my shares without paying for them. They even pay AMT

I don’t have the details to be able to say anything useful. But there might be a narrow window of tax circumstances in which 70% of the equity without AMT but with loan costs is better than 100% with AMT + marginal long-term taxes and no loan costs. (Such schemes make sense if you’re concerned about not being able to exercise your options on short notice after getting laid off. If you have the liquidity, however, set it aside, take the yield and hold form after talking to a CPA.)

[benmanns]

It works out in the event that the shares end up worthless.

[jamiequint]

In this case you would likely owe income tax on the amount EquityBee lent you to exercise the options. Non-recourse loans that are forgiven are considered income by the IRS.

[JumpCrisscross]

> works out in the event that the shares end up worthless

Then you're at parity with never exercising.

[benmanns]

Yes, but you get the benefit of .7x exercising with the cost of never exercising.

Exercise, no successful IPO: lose $x exercise cost

Exercise, successful IPO: lose $x exercise cost, gain $y share sale benefit

No exercise, no successful IPO: gain/lose nothing

No exercise, successful IPO: gain/lose nothing

Service exercise, no successful IPO: lose nothing, maybe gain some AMT credits or capital loss carryovers

Service exercise, successful IPO: lose $x exercise cost plus interest, gain 0.7*$y share sale benefit

Your best best case is exercising yourself and getting the IPO, but you have to weigh that against the likelihood of it occurring and your personal risk tolerance for the $x cost to exercise.

I would never buy a lottery ticket, but I will always accept even .01% of a free lottery ticket.