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It is ridiculous to charge taxes based on fictitious paper valuations. I think taxes should be imposed only when shares are sold resulting in cash.
by maverick_iceman 10y ago
It is ridiculous to charge taxes based on fictitious paper valuations. I think taxes should be imposed only when shares are sold resulting in cash.
- sokoloff 10y agoIf you act in a certain way, you are free to accomplish that for yourself. Only ever do a same-day exercise-and-sell. Never exercise early. Never exercise-and-hold. Enter into a 10b5-1 that ensures you sell any shares immediately upon vesting. I think that covers all the cases and you're protected against being taxed on paper-only valuations. That doesn't mean that your preference should preclude other people from acting differently.
- maerF0x0 10y agoBut it does mean that one has to abandon said "fictitious" value if ever leaving a company (usually 90 days) .
- prostoalex 10y agoThis opens a number of loopholes related mostly to income and estate tax avoidance. Shares of companies can be transferred to heirs for an arbitrary strike price and if they're never sold, there's no capital gain tax, no income tax and no estate tax liability generated. Rinse and repeat for multiple generations. AMT is a quick fix to allow the government to tax the transfer of assets per se.
- deleted 10y ago[deleted]