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This is absolutely crazy. I remember this exact thing happening to people in the dotcom era, they got taxed on gains that they were completely unable to realize
by henrikschroder 7y ago
This is absolutely crazy. I remember this exact thing happening to people in the dotcom era, they got taxed on gains that they were completely unable to realize.
If I understand it correctly, the problem here is the lockup period? If you get options that you are guaranteed that you can sell immediately after exercising them, you should be good, right? Then the proper course of action is to exercise all you can, sell enough to cover your tax liability, and then do as you please with the rest, keep, sell, whatever.
But if you can't sell them on the exercise date, you have to start thinking about the bullshit you just described above, right?
- ssorallen 7y ago> If I understand it correctly, the problem here is the lockup period? For the exact example of Uber, yes. Getting rid of the lockup period is one reason companies have begun using direct listings instead of bank-backed IPOs. There’s no group of investors who want their cut before letting common shareholders sell their shares.
- kortilla 7y agoYeah, or just don’t exercise them hoping to hold for a year to get capital gains taxation instead of income taxation.
- henrikschroder 7y agoHow does that work? Aren't options taxed as income on the difference between strike price and share price at the time of exercise? Capital gains require you to have shares first, right?