Over the 18 years I ran Tatango, we were fortunate enough to sell some of our shares before we eventually sold the company in October 2025.
Usually in startups when someone does this they call it selling "secondary," which usually comes from an investor wanting to purchase your shares. Ours was done a little differently, where because the company was profitable and had cash on the balance sheet, we sold shares back to the company itself. Good deal for us, as we got liquidity from our shares, and good deal for investors who owned shares in the company, because all the shares we sold back to the company were removed from the cap table, meaning existing shareholders' percentage of equity in the company all went up.
To be clear, this was the first real money we'd ever made, so all this was new to us back then. I'm going to write up all the lessons I learned eventually about handling windfalls of money like this, but for now I wanted to give this one piece of advice, as it's something that you can implement immediately when this does happen to you, and it's to pay the taxes immediately.
Not when they're due. Immediately.
It doesn't matter what the windfall is. You sold shares. You got a bonus. You inherited money. You won the lottery. The day that money hits your account, find out what you owe, and prepay the taxes.
The math
Now let me get ahead of you, because I know exactly what you're about to say.
But Derek, that's terrible financial advice. Put the tax money in a high-yield savings account. Earn the interest. The taxes aren't due for almost a year. You're loaning the government your money interest-free for no reason.
I know. I've heard all of it. I've run all the scenarios. On a spreadsheet, you're right.
This has nothing to do with the spreadsheet. This is mental. And I can write about it honestly, because I've done it both ways.
The first time
The first time we sold shares, I did the smart thing. We paid the taxes when they came due, which was almost a full year after the money arrived.
In between, life happened. We celebrated. We made some purchases. We made some investments. The money felt like ours, because it was sitting in our account, and a year is a long time to look at a number and not start treating it like yours.
Then the bill came.
I can tell you, from experience, there is no worse feeling I've had with money than cutting a massive check to the IRS for money I had been looking at for months on end in my bank account. After all those months, after everything, sitting down and wiring away a chunk that large felt like a punishment. It wasn't. It was always theirs. But it didn't feel that way, and feelings are the entire point of this post.
The second time
The second time we sold shares, we did it differently.
So almost the moment the proceeds landed, I had our accountant estimate what we'd owe, and we prepaid it. Right then. The tax money never lived in our account long enough for my brain to start even thinking it was ours.
When the taxes came due the following year, there was nothing to do. No scramble. No massive check. No coming up with money that was never ours to begin with.
It was a dramatically better feeling. Same taxes. Same dollars. Completely different experience, especially when tax time came around. No pain, as the money was already gone, had been gone since almost day 1.
The feeling is most of it. But there are two real reasons underneath it. It's done, and the risk is off.
It's done
The first is certainty. I've watched millions of dollars vanish from a bank overnight, having gone through the Silicon Valley Bank debacle in 2023. I've seen what it does to your stomach. Prepay your taxes and one thing becomes permanently true: you will never, under any circumstance, be unable to pay them. It's done. No bank collapse, hack, lawsuit, divorce, etc. will change the fact that your taxes on the windfall are already paid for, so you don't need to worry.
Risk off
The second is risk, and this is the one I've watched ruin people I know. And to be very clear, this isn't a hypothetical example. I've seen this happen with too many of my friends, hence why I'm writing this blog post.
A friend comes into money, and they don't take my advice, and they try to turn that money owed to the IRS into more money before the payment comes due.
They look at the high-yield savings rate and think, that's so low, why am I letting it sit there. So they put the tax money in an index fund. Then a little of it into options. Then a hard money loan, crypto, a for-sure investment where they'll get their money back in 6 months, etc.
Then the taxes come due. And depending on which way the market happened to be swinging that month, that hard money loan has come due and now you're in arbitration with the borrower, your crypto picks weren't as smart as you thought they were, the options swung the other way, that money you "set aside" for taxes is a fraction of what it started out as. Worse yet, it's all gone, and now you're forced to take money from the non-tax portion to pay taxes. Even worse, the tax money is gone, and all the rest of the money is spent, or invested in things that don't have liquidity, and then you're really screwed as you can't make your tax payment.
Lottery winners
Have you ever noticed that when someone wins a lottery, the taxes are deducted before they receive any payout? Why do you think that is? It's because state and federal governments know that left to your own devices, you'll most likely try to turn that tax money into more money, and will screw it up royally. And the government doesn't want to take that chance. They want to get paid.
So take the hint. If the government assumes you'll screw this up and pulls its cut before you can ever touch it, do the exact same thing with yours. Don't argue with them. Take the tax money out the day the windfall lands, just like they would, and forget about it.
Mechanics
It's relatively simple. When you receive the money, get your tax accountant to produce an estimate of how much you'll owe. Then go to irs.gov/payments and use Direct Pay. No account, no login, no fee. Select Estimated Tax, apply it to 1040-ES, choose the current year, and pay straight from your bank account. You'll get a confirmation number on the screen and an email confirmation if you opt in. Save it and send it to your tax accountant for safekeeping.
If it were me
If you come into money, especially the once-in-a-lifetime kind, the lottery ticket or the inheritance or the sale you've been waiting 18 years for, here's the whole post in one line.
Figure out what you owe with the help of a tax professional, then pay it that week. Invest and spend the rest knowing it's actually yours.
You'll give up a little interest. You'll gain something the spreadsheet can't show you.
I'm not telling you what's optimal. I'm telling you what I did, what felt awful, and what felt right. I've come into money both ways now, waited once and prepaid once, and prepaying wins every time. That's the whole reason I wrote this. Take it from someone who's been on both sides of it.
Take it for what it's worth.