3 ms·

Sweden did the same. A lot of people suffered during the dot com bust because they were taxed on enormous unrealised profits that had completely disappeared by

• WalterBright 5y ago
  That happened to a friend of mine in the US. He had a "taxable event" when his stock options vested. By the time the tax bill was due, his stock was worthless, and he went bankrupt. He lost his home and last I saw was living in an RV.
  • chii 5y ago
    That's a different situation. Stock options are the same as having a cash payment, which is then immediately used to purchase the stock. It's correct to tax stock options when they vest. > By the time the tax bill was due, his stock was worthless if you could not afford the tax bill with free cashflow, you need to sell to cover. Not selling means you're taking the tax debt owed, and gambling it on stocks. It sucks that your friend lost everything - often people who have vested stocks don't think about the consequences of what they're doing, and just go for the greediest (and most risky) option of holding and hoping.
    • WalterBright 5y ago
      He did not realize that he would owe income taxes on the difference between the option price and the value of the stock the day he bought it. He thought the option price would be his basis and he'd owe capital gains when he sold the stock. That was the way things used to be, but Congress had changed the rules. Quite a few people have been caught unawares by that.