Quick reference, not a scenario walkthrough
The tax and structure questions that come up alongside a sale
Twelve reference cards for the tax and administrative threads that run underneath a secondary transaction but aren't specific enough to be their own mechanics deep dive — what it is, why it matters here, the quick facts, and the one mistake people actually make.
Tax treatment
NIIT: The 3.8% Surtax on Secondary Gains
A large one-time gain can push you over the threshold for this additional federal tax, on top of ordinary capital gains.
Read the card →Worthless Stock Write-Off
A failed position can become a real tax loss — but only once it's provably worthless, not merely struggling.
Read the card →AMT and ISO Exercise Interacting with a Secondary Sale
Selling ISO-exercised shares before the holding period is met can undo favorable tax treatment.
Read the card →State Tax Residency and Where Your Gain Is Taxed
Your state of residency at the time of sale generally matters — not the company's home state.
Read the card →Transfer & structure
Estate & Inheritance Transfer of Startup Stock
Heirs generally inherit at a stepped-up basis — but valuing illiquid stock at date of death is its own challenge.
Read the card →Gifting Startup Shares to Family
A gift carries over your original basis to the recipient — the opposite of an inheritance's stepped-up basis.
Read the card →Donating Appreciated Private Stock to Charity
A way to avoid capital gains tax on appreciation entirely — if you plan for it well before a sale is negotiated.
Read the card →Divorce and Marital Property Division of a Startup Stake
A real, recurring reason angels end up selling — and illiquidity makes the split harder than a brokerage account.
Read the card →Reporting & compliance
K-1 vs. 1099: What Tax Form to Expect
Which form you get depends entirely on structure — and most direct secondaries generate no form at all.
Read the card →Cost Basis Tracking Across Multiple Purchases
If you built your position in more than one purchase, each tranche can have its own basis, date, and holding-period clock.
Read the card →Cross-Border Wire & Tax Reporting
International buyers and sellers add real compliance steps — and real closing delay if you don't plan for it.
Read the card →Backup Withholding & the W-9 at Closing
A slow-to-return W-9 is a purely administrative reason funds get withheld at closing.
Read the card →None of this is tax or legal advice. For the mechanics behind a specific structure, seedeal mechanics deep-dives; for the step-by-step process itself, see the seller's and buyer's playbooks.