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Not an American but this is interesting.... > The estate tax and the alternative minimum tax, which Mr. Trump has railed against for years, would be repealed u

Not an American but this is interesting.... > The estate tax and the alternative minimum tax, which Mr. Trump has railed against for years, would be repealed under his plan. The AMT is one of the largest issues for people calling their stock options on non liquid companies. > Mr. Mnuchin offered few specifics about the blueprint, other than confirming that its centerpiece will be a 15 percent business tax rate This is also very interesting, and I think, its the core of Trump's tax plan. Instead of giving corporations a tax holiday to bring back offshore money, just lower the tax rate to create a permanent tax holiday. If the numbers are to be believed ( 250 Billion for Apple alone) then this could add alot of money to the US economy over the next few years. Look for a wave of US company to US company acquisitions to spring up if this comes to fruition. Event driven hedge funds are going to have a bonanza with this! It might even be enough to make the economy jump going into the next election cycle.

creaghpatr 10y ago
>The AMT is one of the largest issues for people calling their stock options on non liquid companies. This cannot be stated loudly enough.
- pdelbarba 10y ago
  Can you elaborate?
  - mastax 10y ago
    Donald Trump owns a large, illiquid, private company. The AMT is one of the few taxes Donald has had to pay since he wrote-down a billion dollar loss in the 90s. That's all I know.
  - creaghpatr 10y ago
    If a company (startup or otherwise) is private, then stock options holders can't liquidate their shares. However, they are still required to pay taxes on the capital gains when they exercise, which can be huge if the company has grown exponentially. Not only do you have to take the risk of the stock/company crashing and burning but you have to pay in advance the taxes on the "gains" which you can't actually cash out. It's a trap, only thing you can do is stay at your company until liquidity occurs for shareholders.
    - karmelapple 10y ago
      I don't think I fully comprehend - do stock options holders need to pay tax even if they have not added actual money to their bank account? Why would someone have to pay in advance taxes on a gain that has not actually happened? If I don't have the money in my bank account yet, how can I pay this huge amount of gains tax even?
      - maxerickson 10y ago
        They exercise the options.
      - antognini 10y ago
        > Do stock options holders need to pay tax even if they have not added actual money to their bank account? Yes. The options are converted into shares, which is considered a taxable event by the IRS. Ordinarily this isn't a problem because you can sell some fraction of the stock that you gained to pay for the taxes. But if the company is not public, you have no easy way to sell the shares. > If I don't have the money in my bank account yet, how can I pay this huge amount of gains tax even? That's exactly the problem. Many employees at unicorn startups are stuck in "golden handcuffs." If they leave, they oftentimes can't exercise their options due to the taxes, in which case they lose them. This forces them to stay in the hopes that one day the company will go public and they can exercise their options.
        derekp7 10y ago
        Just to make this clear (correct me if I'm wrong)... If you buy stock at market value, and it increases in value over time, you only pay tax when you sell it. But if you exercise a stock option (in which you purchase stock for a [typically] lower price than current value), the difference in value is considered the same as if you received any other non-monetary income (i.e, that difference in value is treated the same as a stock grant), in which you would have to pay tax in the current year. Did that about sum it up?
        10y ago
maxerickson 10y ago
There is a tax holiday in addition to the lower corporate rate. The plan would include a special one-time tax to entice companies to repatriate cash that they are parking overseas.
return0 10y ago
Why would apple repatriate their foreign assets (other than paying dividends)? They can borrow anything they need already.
- protomyth 10y ago
  Bloomberg's article says "It also imposes a one-time tax on about $2.6 trillion in earnings that U.S. companies have parked overseas." - So, I am a bit lost also on this plan getting Apple to repatriate. https://www.bloomberg.com/news/articles/2017-04-26/white-house-unveils-trump-s-opening-bid-for-biggest-tax-cut https://www.bloomberg.com/news/articles/2017-04-26/white-hou...
bpodgursky 10y ago
Seriously. Nobody who hasn't gone through the ISO+AMT hell could possibly internalize how Kafkaesque and insane it is.
tmaly 10y ago
AMT is also a huge issue for parts of the middle class. It was originally designed to target upper class tax payers that would use loop holes. The problem is that it was never indexed for inflation, so now parts of the middle class suffer from the AMT

creaghpatr 10y ago

>The AMT is one of the largest issues for people calling their stock options on non liquid companies. This cannot be stated loudly enough.

pdelbarba 10y ago
Can you elaborate?
- mastax 10y ago
  Donald Trump owns a large, illiquid, private company. The AMT is one of the few taxes Donald has had to pay since he wrote-down a billion dollar loss in the 90s. That's all I know.
- creaghpatr 10y ago
  If a company (startup or otherwise) is private, then stock options holders can't liquidate their shares. However, they are still required to pay taxes on the capital gains when they exercise, which can be huge if the company has grown exponentially. Not only do you have to take the risk of the stock/company crashing and burning but you have to pay in advance the taxes on the "gains" which you can't actually cash out. It's a trap, only thing you can do is stay at your company until liquidity occurs for shareholders.
  - karmelapple 10y ago
    I don't think I fully comprehend - do stock options holders need to pay tax even if they have not added actual money to their bank account? Why would someone have to pay in advance taxes on a gain that has not actually happened? If I don't have the money in my bank account yet, how can I pay this huge amount of gains tax even?
    - maxerickson 10y ago
      They exercise the options.
    - antognini 10y ago
      > Do stock options holders need to pay tax even if they have not added actual money to their bank account? Yes. The options are converted into shares, which is considered a taxable event by the IRS. Ordinarily this isn't a problem because you can sell some fraction of the stock that you gained to pay for the taxes. But if the company is not public, you have no easy way to sell the shares. > If I don't have the money in my bank account yet, how can I pay this huge amount of gains tax even? That's exactly the problem. Many employees at unicorn startups are stuck in "golden handcuffs." If they leave, they oftentimes can't exercise their options due to the taxes, in which case they lose them. This forces them to stay in the hopes that one day the company will go public and they can exercise their options.
      - derekp7 10y ago
        Just to make this clear (correct me if I'm wrong)... If you buy stock at market value, and it increases in value over time, you only pay tax when you sell it. But if you exercise a stock option (in which you purchase stock for a [typically] lower price than current value), the difference in value is considered the same as if you received any other non-monetary income (i.e, that difference in value is treated the same as a stock grant), in which you would have to pay tax in the current year. Did that about sum it up?
        10y ago

maxerickson 10y ago

There is a tax holiday in addition to the lower corporate rate. The plan would include a special one-time tax to entice companies to repatriate cash that they are parking overseas.

return0 10y ago

Why would apple repatriate their foreign assets (other than paying dividends)? They can borrow anything they need already.

protomyth 10y ago
Bloomberg's article says "It also imposes a one-time tax on about $2.6 trillion in earnings that U.S. companies have parked overseas." - So, I am a bit lost also on this plan getting Apple to repatriate. https://www.bloomberg.com/news/articles/2017-04-26/white-house-unveils-trump-s-opening-bid-for-biggest-tax-cut https://www.bloomberg.com/news/articles/2017-04-26/white-hou...

bpodgursky 10y ago

Seriously. Nobody who hasn't gone through the ISO+AMT hell could possibly internalize how Kafkaesque and insane it is.

tmaly 10y ago

AMT is also a huge issue for parts of the middle class. It was originally designed to target upper class tax payers that would use loop holes. The problem is that it was never indexed for inflation, so now parts of the middle class suffer from the AMT