SharesToCharity

I would never see the shares as income, because you can "donate in-kind" by transferring ownership of the shares to the charity directly. The charity then inherits the cost basis and pays the capital gains when they sell.

It's important to note that I hold stock as an 83(b) election, not a stock option. Options can also be donated in-kind but that is even more complicated.

That said, it seems it wouldn't zero out my taxes. If donated to a public charity it has the potential to reduce taxable income by 50% for up to five years. That's still significant though.

can you offset capital gains against income tax in the US?

You can offset charitable donations against income tax. The personal capital gains is avoided by transferring shares directly, without selling. (The charity typically then pays the capital gains via unrelated business income tax.)

Alternatively, have you tried selling part of your stake to the new investors in the round, at a discount?

Unfortunately, no. I tried :(

Interesting. It seems their pledge is structured to not do anything until an exit occurs. It's worth reaching out to them though.

Well as I mentioned the company is currently in the process of closing a 3rd investment round. Therefore investors that are much more sophisticated than me (in both the colloquial and regulatory sense), with access to better information (e.g. up to date financials, whereas I've been out of the loop) have decided that the company is worth $x per share. If the company follows best practices in assigning a 409(a) valuation for my shares based on this sale of preferred shares, that is as far as I can tell the gold standard for valuation. My concerns are simply a lack of faith in the management and product. I'm not sure how this is any different than me saying Disney is overvalued because I think Bob Iger is a bad manager and I didn't enjoy their latest films -- if I chose to offload some Disney stock the IRS will still use the market valuation. Well, the market value of illiquid common stock is the fair 409(a) valuation based on the latest sale of preferred shares.

I will take this to a tax lawyer before proceeding, but I was hoping to find some precedent (for or against) before doing so. Tax lawyers are not cheap, and I'm presently living month to month (paper valuations notwithstanding).