Pardon my naivety, but you mention here that you cashed out only 1/3rd because cashing out 100% had "tax ramifications", even though 6 years later the shares you kept were worthless. Could you elaborate on the tax ramifications that made cashing out 100% a net loss compared to keeping shares that would only depreciate over time? If you cashed out for $50k with a third of your options, why wouldn't cashing out all of them be in the $150k range?
Good question. To clarify: I cashed out 1/3 because I'm inherently conservative financially and had no idea whether the stock would go up or down. Not because of tax purposes.
My colleagues who ran into problems with Uncle Sugar are the ones who bought and held their stock for less than a year (but long enough for it to tank in value), didn't make estimated tax payments and were fined by the IRS, or otherwise made decisions based on irrational exuberance, like borrowing against their options to buy jet-skis and crap.
