OpenAI filed for IPO. Your PPUs are becoming shares. Here's what that means for your taxes.

What's publicly known

The PPU → PBC share conversion: what changes and what doesn't

The LLC-to-PBC restructure is the most consequential event for PPU holders before the IPO itself. Based on public reporting:

• What reportedly stays the same: your cost basis (either $0 from an 83(b) election at grant, or the FMV on each vest date), your vesting schedule, and your holding-period start date for capital-gains purposes. The conversion is not treated as a taxable sale — your existing tax history carries into the new instrument.
• What reportedly changes: the return cap disappears. In the old capped-profit structure, PPU proceeds were subject to an internal ceiling. In the PBC share structure, the cap is gone — your upside tracks the full share price from here.
• What's uncertain: whether any aspect of your specific conversion has a tax consequence depends on how the conversion terms interact with your individual grant documents and 83(b) filing status. The IRS has not issued specific guidance on OpenAI's structure. Get a CPA who has seen the PBC conversion documents to confirm before the listing.

The 83(b) election: the question that separates the tax bills

For PPU holders, the Section 83(b) election³ made at grant — or not made — determines whether years of appreciation are taxed at long-term capital gains rates or ordinary income rates. The difference at the income levels most OpenAI employees face routinely exceeds seven figures.

• If you (or OpenAI on your behalf) filed an 83(b) election within 30 days of grant: you recognized the FMV of the PPUs at grant as ordinary income — typically near zero, since profit interests are usually granted at nominal value. Your holding period started at the grant date. By mid-2026, any employee who received PPUs more than one year ago and filed an 83(b) election has long-term capital gains treatment on all appreciation — taxed federally at 20% + 3.8% NIIT (for high earners), not at the 37% ordinary rate. The PBC conversion does not restart your clock or reset your basis.
• If no 83(b) election was made: each vesting event was an ordinary income event at the fair market value of units vesting that day (the "spread"). Your basis for those vested units is the vest-day FMV; gains above that become capital once held a year past vesting. For units still unvested at conversion, the vesting event itself will be the ordinary income trigger.
• The conversion doesn't fix a missed 83(b): if vesting created ordinary income events in prior years, those are history. What you can still optimize is the selling order of your converted shares (which lots are fully long-term?) and the management of unvested units going forward.

If you're unsure whether an 83(b) election was filed, start with your grant documents and your broker's cost-basis records. Some employees filed themselves; some employers filed on their behalf; many didn't know it was an option.

What the IPO timeline means for your planning

A confidential S-1 starts the clock on SEC review — typically 30–60 days before comments, then a back-and-forth period, then a public S-1, then the road show. Fall 2026 is aggressive but plausible. The more useful frame is: plan for the lockup, not for the listing date.

1. The lockup matters more than the IPO day. Modern IPO lockups are increasingly staggered — multiple tranches released over a 6-month window — as SpaceX's reported schedule illustrates. Your first real decision isn't "what do I do at the IPO" but "how much do I sell in each release window?" Decide that now, while you can think clearly, before MNPI rules and price adrenaline dominate your thinking.
2. Double-trigger RSUs: the hidden ordinary-income event. If you hold traditional RSUs alongside PPUs, they settle and become taxable income at the IPO (the second trigger). That's typically an event equal to a year's salary or more, hitting in a single tax year, with 22% supplemental withholding that undershoots most OpenAI employees' real 35–37% marginal rate. Reserve for the gap; fund estimated payments in the quarter the IPO occurs.
3. Options before an IPO. If you hold ISOs, the IPO creates a public benchmark. ISO exercise timing changes dramatically once there's a quoted price. AMT exposure (the preference spread × 28%, net of AMT exemption) is now fully modelable. The ISO exercise + AMT calculator runs the math; the decision of whether to exercise pre- or post-IPO depends on your holding-period status, the current vs. expected price, and your AMT credit carryforward position — that's advisor territory.
4. Concentration pre-planning. After the conversion and listing, you'll likely hold a large, single-stock position in a newly-public company with no price history. Decide your target concentration (what percent of net worth you're comfortable holding in one volatile stock) while you can't trade. Then build a glidepath — either a discretionary tranche plan or, if you're an officer subject to MNPI windows, a 10b5-1 plan.
5. The California problem. California taxes long-term capital gains as ordinary income — no preferential rate. OpenAI is headquartered in San Francisco; most employees are California residents. If you're considering relocating to a no-income-tax state before the IPO, state residency and domicile rules are complex and must be established well in advance. This is one of the most consequential planning decisions for employees with large appreciation; it requires a CPA with state-residency expertise, not a weekend move.

The six planning steps to take now

1. Locate your PPU grant documents. Find every grant agreement. Confirm whether an 83(b) election was filed (check for a copy signed within 30 days of each grant date and a certified mail receipt to the IRS).
2. Map your vesting schedule. Which units have vested, which are unvested, and what accelerates on an IPO? Unvested units converting at IPO are often the largest single income event.
3. Model the PBC conversion. How many shares will you hold after conversion? At what basis? The conversion terms in your grant documents and any company communications are the reference.
4. Set a concentration target. Not what you think the stock will do — what percent of your net worth should one volatile, newly-listed stock represent? Decide now, in writing, before the IPO pop makes "hold everything" feel obvious.
5. Estimate the tax in both lanes. If 83(b) was filed: a large LTCG event at lockup release. If not: a mix of ordinary income (unvested) and LTCG (vested lots held >1 year). The net-proceeds calculator gives a rough shape for each scenario.
6. Pre-fund estimated quarterly taxes. If the withholding undershoots at IPO settlement (it usually does), you'll owe the difference by the next estimated-tax deadline. Don't let the tax payment surprise you a quarter after the liquidity event.

Trying to buy OpenAI equity?

OpenAI is not yet public. Secondary-market access for accredited investors runs through specialized funds and SPVs with their own terms, minimums, and illiquidity risks — we don't arrange or sell investments. This page is for employees and current holders planning what they already have. Once the IPO occurs, OpenAI shares will trade on a public exchange like any stock.

The window to plan is before you can trade, not after.

Get matched with a fee-only fiduciary who works pre-IPO and IPO equity — 83(b) review, PBC conversion tax analysis, glidepath design, 10b5-1 setup, and estimated-tax planning. Free, no obligation.