1. You exercise your options, for a paper gain of millions of dollars
2. However, you can't actually sell the shares (there are likely contractual restrictions on selling them, and even if not, there's not a liquid market)
3. So you have to pay millions of dollars of taxes even though your cash flow is zero.
And before you say "but they're ISOs", there's no such thing as ISO's under AMT so it doesn't help at all.
1. You exercise your options, for a paper gain of millions of dollars
2. However, you can't actually sell the shares (there are likely contractual restrictions on selling them, and even if not, there's not a liquid market)
3. So you have to pay millions of dollars of taxes even though your cash flow is zero.
And before you say "but they're ISOs", there's no such thing as ISO's under AMT so it doesn't help at all.