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Ouch. If I understand you correctly, this is then a really awful scenario for founders. As a founder, my only assets were the stock of my company . I don't own

Ouch. If I understand you correctly, this is then a really awful scenario for founders. As a founder, my only assets were the stock of my company . I don't own any other stock, certainly none that would go thru the roof over a year or 2. If the company goes south after a hot streak, I end up with excess unrealized losses that I can't use, because I have no other assets with unrealized gains to book against my carryforward losses.

neltnerb 5y ago
I am not an accountant, but I believe this to indeed be the case. If you previously took losses, you can carry them forward but not get an actual refund. It might not be practical to do because what tax bracket do you use? It's simpler as an offset, so I guess they just have to pick a rule and so they picked one that is advantageous to them. The only other option that comes to mind is that if you take a significant loss, you get to retroactively get refunded from a previous year. This actually doesn't seem that intractable, it shouldn't be all that complicated to implement.
dragonwriter 5y ago
> If I understand you correctly, this is then a really awful scenario for founders. It makes having all your eggs in one basket (very slightly) worse than the generally bad idea it already is (if its a billion dollar basket so that you qualify for this treatment in the first place.) But if all your eggs are in that basket, either the company bounces back later or you are wiped out anyway, so its not that much of a change from the status quo in that respect. Not that I like the proposal, mind you
ncallaway 5y ago
> As a founder, my only assets were the stock of my company . I don't own any other stock, certainly none that would go thru the roof over a year or 2. - Is it a publicly traded company? Or do you readily trade shares of it on the secondary market? If not, then you wouldn't owe any taxes under this scheme, which only applies to "tradable covered assets" (leg. text is here: https://www.finance.senate.gov/chairmans-news/wyden-unveils-billionaires-income-tax https://www.finance.senate.gov/chairmans-news/wyden-unveils-...) - Are your personal shares of the company worth > $1B? If not, then you also wouldn't owe any taxes under this scheme, which allows you to designate up to $1B of normally "tradable covered assets" as "non-tradable covered assets".

neltnerb 5y ago

I am not an accountant, but I believe this to indeed be the case. If you previously took losses, you can carry them forward but not get an actual refund. It might not be practical to do because what tax bracket do you use? It's simpler as an offset, so I guess they just have to pick a rule and so they picked one that is advantageous to them. The only other option that comes to mind is that if you take a significant loss, you get to retroactively get refunded from a previous year. This actually doesn't seem that intractable, it shouldn't be all that complicated to implement.

dragonwriter 5y ago

> If I understand you correctly, this is then a really awful scenario for founders. It makes having all your eggs in one basket (very slightly) worse than the generally bad idea it already is (if its a billion dollar basket so that you qualify for this treatment in the first place.) But if all your eggs are in that basket, either the company bounces back later or you are wiped out anyway, so its not that much of a change from the status quo in that respect. Not that I like the proposal, mind you

ncallaway 5y ago

> As a founder, my only assets were the stock of my company . I don't own any other stock, certainly none that would go thru the roof over a year or 2. - Is it a publicly traded company? Or do you readily trade shares of it on the secondary market? If not, then you wouldn't owe any taxes under this scheme, which only applies to "tradable covered assets" (leg. text is here: https://www.finance.senate.gov/chairmans-news/wyden-unveils-billionaires-income-tax https://www.finance.senate.gov/chairmans-news/wyden-unveils-...) - Are your personal shares of the company worth > $1B? If not, then you also wouldn't owe any taxes under this scheme, which allows you to designate up to $1B of normally "tradable covered assets" as "non-tradable covered assets".