Secondary Tender Offer AMT Impact Calculator
Secondary tender offers let employees sell pre-IPO stock back to the company at a fixed price. The catch: if shares come from ISO exercise, the sale triggers both ordinary tax on the bargain element AND potential AMT recapture from prior-year exercise. Plan the tax carefully — surprises here can wipe out half the proceeds.
Qualifying vs Disqualifying Disposition
ISO qualifying disposition requires holding >2 years from grant date AND >1 year from exercise date. Meet both → entire gain (proceeds - strike) qualifies for LTCG (15-20% federal). Miss either → disqualifying. Bargain element (FMV at exercise - strike) becomes ordinary W-2 wages. Remainder still LTCG. Holding period clock matters more than tender price.
Why AMT Becomes a Wash
If you paid AMT in the prior exercise year, you get an AMT credit against ordinary tax. When you tender and pay ordinary tax on the bargain element, the AMT credit offsets it. Net AMT impact: usually zero over the exercise-to-tender period if both years are tracked. Form 6251 + Form 8801 capture this — work with a CPA who specializes in equity comp.
Tender Offers Often Trigger 409A Resets
Companies running tenders typically need a fresh 409A valuation. If 409A drops below tender price, future option grants strike at lower price — good for new hires, neutral for existing holders. The tender itself does not affect already-granted strike prices.
Source: IRS Publication 525 (Taxable Income), IRC Section 422 (ISO rules), Form 6251 / 8801. Last updated: May 2026.