Ask HN: Options question about FMV and 83(b)
I have a significant number of NSO (early exercise) options at a seed-funded startup. The company is doing very well and as such, I'm planning to early exercise and file a form 83(b) election to reduce my tax burden. The question now is when should I exercise.
At the moment, the strike price is the same as when I was issued the options. The company has never done a 409A valuation and the FMV was decided by the Board. We've received soft-offers from investors at a valuation significantly higher than the current FMV. Given the size of the company, I also have full visibility into fundraising and potential 409A valuation processes.
To exercise, I will borrow money from a family member so I'd like to delay exercising until I know that the FMV will go up.
Is what I'm doing legal? Can the board retroactively change the FMV? If the IRS investigates down the road and finds that the company's FMV at the time of my exercise is much higher, would my tax burden go up?
PS: Yes, I acknowledge the risks in purchasing shares in startups.