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In an IPO year, you can owe tax on several years of equity grants at once. A pre IPO tax planning advisor at Dimov Tax models stock options, RSUs, founder stock and planned sales for founders, executives and employees before the event, so you see the projected tax while the decisions are still open.
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We build the projection from the figures you will later report on the return:
We run a trial return in professional tax software, compare the scenarios and give you the projected tax, a tax reserve, the estimated payments due and any withholding gap, the difference between what payroll withholds and what you will owe.
What we model at each stage of an IPO
| 01 Before the IPO | 02 Exercise or vesting | 03 Sale or tender offer | 04 After the sale |
|---|---|---|---|
| Inventory equity | Model ISO and NSO exercises | Project sale proceeds | Enter the actual figures |
| Map household income | Review RSU withholding | Calculate tax reserve | Report the stock sales |
| Set planning assumptions | Test AMT exposure | Set estimated payments | File the return |
We model ISO and NSO exercises from the expected exercise date, strike price and fair market value. You owe no regular federal income tax when you exercise an ISO, though the IRS adds the spread to your AMT income if you still hold the shares at year end.
Double-trigger RSUs, grants that vest only once both a service period and a liquidity event are met, can vest in bulk at the IPO. Where payroll uses the flat supplemental rate, it withholds federal tax at 22% for 2026 (37% above $1 million for the year), while a household in the 32% or 35% bracket owes more, so we project the shortfall before the vest date.
We check the acquisition date, original issuance, company status and records behind a Section 1202 claim, since the exclusion rules now depend on when the stock was issued. The full analysis is a separate engagement.
We project capital gains from a planned sale or tender offer using expected proceeds, basis, holding period and compensation income. Under a lock-up, the period after an IPO when you cannot sell, your first sale may be in the next tax year, so we project both years. The engagement covers the tax analysis; investment advice is a separate matter.
We compare expected tax, withholding and prior-year tax to the federal estimated tax rules. For 2026 you avoid the underpayment penalty by paying in 90% of the current year’s tax or 100% of the prior year’s tax, 110% where prior-year AGI was over $150,000.
Once you have the W-2, 1099-B and exercise statements, we carry the planning file into the Form 1040 engagement and report the equity items from the final documents.
A $400,000 vest for a household already in the 35% federal bracket. We assume the full $400,000 is taxed at 35% and leave state tax out. 2026 rates.
| Item | Amount |
|---|---|
| RSU income vesting at the IPO | $400,000 |
| Federal tax payroll withholds at 22% | $88,000 |
| Federal tax due at the 35% bracket | $140,000 |
| Shortfall to pay through estimates or extra withholding | $52,000 |
Send the grant schedule and the expected IPO date, and we come back with the projected tax for each date.
Make sure to start planning with a professional far ahead of time, maybe six months before, nine months before.
The prior return, recent paystubs, expected income, your state of residence and the equity documents. Existing clients send only what changed.
A specialist enters the assumptions into professional tax software and projects the federal and state result for each exercise, vesting or sale scenario you want compared.
On the planning call you get the projected tax, the withholding gap, the estimated payments and their dates for each scenario, and we name any separate work, such as a QSBS analysis.
When the IPO date, share price, vesting amount or sale plan changes, we rerun the projection and reissue the numbers.
Founders, executives, employees and early investors whose IPO capital gains tax or compensation income changes with the timing and size of the event.
We model founder stock, planned sales, the QSBS screen and your 83(b) election records together, before you commit the proceeds.
We model RSUs, ISOs, NSOs, bonuses and payroll withholding for the household in the IPO year, from the expected dates and amounts.
We project the capital gain and estimated payments on a secondary sale, tender offer or IPO sale, and flag where a separate Section 1202 analysis applies.
We set the quote from these factors:
One employee with RSUs only, one scenario and one state is at the light end. These are the factors, not a quote.
I used to do my own taxes, but after the company I work for IPOed and I received RSUS I was worried about things being too complicated.
Our team includes CPAs and Enrolled Agents who work on individual returns, business taxes and tax planning. Tell us what you need help with when you get in touch.
Once the IPO date, lock-up and sale are set, you can no longer change the tax result. Send the expected event, your equity types and the decisions still open to you, and we scope the analysis and quote it.
These are general rules and are not advice on your situation. The tax on equity depends on your grant terms and your state, so speak to a CPA before you act.
