Private-company liquidity
Tender Offer Tax Planning for Private-Company Employees
Prepare for a private-company tender offer by reviewing eligible shares, award type, basis, holding period, tax lots, payroll reporting, state sourcing, and cash reserves.
Direct answer
A tender offer is a limited transaction window, so tax planning must happen before the election deadline. Employees should confirm which shares are eligible, whether the transaction is a stock sale or compensation event, which lots will be accepted, how basis and holding periods apply, what payroll or broker forms will be issued, and how much cash should be reserved for federal and state tax.
The decisions to put on one timeline
Read the offer documents
Confirm price, eligible security, maximum quantity, proration, election deadline, settlement date, representations, and transfer restrictions.
Classify the transaction
Determine whether the event includes option exercise, cash settlement, repurchase, or a sale of already-owned shares.
Select lots intentionally
Compare basis, holding period, AMT basis, state sourcing, and documentation before submitting an election.
Reserve tax cash
Project wages, gains, AMT credit, withholding, and estimated-payment deadlines rather than spending the full proceeds.
One tender can contain more than one tax result
An employee exercises NSOs and immediately sells some shares while also tendering older exercised ISO shares. The first portion may include W-2 compensation, while the older shares may produce capital gain and an AMT adjustment.
Simplified illustration. Transaction documents, company reporting, and the employee's lot history control the analysis.
What planning examines
Offer and award-document review
Eligible-share and tax-lot schedule
Federal, AMT, state, and payment projection
Election and post-settlement reconciliation
What you receive
The work product should turn tax analysis into specific decisions, dates, and records that can be implemented.
Frequently asked questions
Is a tender offer always taxed when I receive cash?
Cash receipt is important, but the tax character depends on what was transferred or settled. Stock sales, option exercises, and cash-settled awards can be reported differently.
What happens if the offer is prorated?
The final accepted quantity may be lower than the election. Tax and cash projections should include a reduced-sale scenario and be reconciled after settlement.
Should I wait for Form 1099-B before checking basis?
No. Basis and lot identification should be reviewed before the election when possible. Waiting until tax filing can make records harder to correct and may miss time-sensitive broker instructions.
Continue with a related guide
Tax Lot and Specific Identification
Learn how tax-lot selection, FIFO, specific identification, basis, holding period, and AMT basis can change the tax result of a company-stock sale.
Read the guideRSU and Stock Cost Basis
Learn why employee-stock basis on Form 1099-B may need adjustment and how to reconcile RSU or option income with W-2, payroll, and broker records.
Read the guidePre-IPO Employee Tax Planning
Prepare employee equity for an IPO or direct listing by coordinating RSU settlement, option exercise, AMT, lockup, tax lots, and cash reserves.
Read the guideNeed a complete tax projection?
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