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> Doesnt selling stock immediately rather than after a year mean your tax rate on it is higher? This is the exact thinking that got many people in trouble duri

> Doesnt selling stock immediately rather than after a year mean your tax rate on it is higher? This is the exact thinking that got many people in trouble during the dot.com bubble. They exercised their options and neglected to sell and hold enough capital to pay their tax obligation. Then the bubble burst and stock prices dropped, in some cases to nothing, within a year. The IRS still wanted the capital gains taxes on the difference between the option's grant price and the stock price on the day the options were exercised (aka the taxable event). It was not uncommon to have people loose their houses and have their wages garnished to pay off their taxes. Consider this a cautionary tale when speculatively trading Bitcoin.

beagle3 13y ago
But do see my other comments on SEC rule 144 - sometimes you are forbidden from selling in a way that exposes you to loss risk that cannot be mitigated without running afoul of security laws.
- stevewilhelm 13y ago
  You can purchase put options or employ other strategies to hedge against risk when one owns a large position in a single stock.
  - tsotha 13y ago
    Not always. Sometimes that's against the rules, depending on exactly how the stock is awarded.
  - beagle3 13y ago
    There was specific language that explicitly said "this is illegal" until the latest revision. Now, it's implicit, and in inquiries to the SEC they have repeatedly said "that goes against regulation". The general idea behind rule 144 very sane: It's supposed to limit pump-and-dump IPOs and M&As, by forcing anyone who did not pay for their shares outright to wait 6 months before they can gain anything (and legally, the SEC is only interested in the overall guarantee - e.g. put options that guarantee you don't lose are AGAINST the current spirit and the former letter of the law). However, the laws apply equally to someone who owns 90% of the shares (who is in a position to abuse an IPO and M&A) and 0.1% of the shares (who is likely an employee receiving RSU or options, has zero control, and likely not even any finances to draw upon) The tax law is insane, the security regulations are complicated, and their interplay is ludicrously insanely crazy. Whenever you see people saying "oh, it's very simple - you just didn't get the right advice" you can be sure that they have no idea what they are talking about - either they didn't have to deal with it, or they weren't aware they were doing something illegal.

beagle3 13y ago

But do see my other comments on SEC rule 144 - sometimes you are forbidden from selling in a way that exposes you to loss risk that cannot be mitigated without running afoul of security laws.

stevewilhelm 13y ago
You can purchase put options or employ other strategies to hedge against risk when one owns a large position in a single stock.
- tsotha 13y ago
  Not always. Sometimes that's against the rules, depending on exactly how the stock is awarded.
- beagle3 13y ago
  There was specific language that explicitly said "this is illegal" until the latest revision. Now, it's implicit, and in inquiries to the SEC they have repeatedly said "that goes against regulation". The general idea behind rule 144 very sane: It's supposed to limit pump-and-dump IPOs and M&As, by forcing anyone who did not pay for their shares outright to wait 6 months before they can gain anything (and legally, the SEC is only interested in the overall guarantee - e.g. put options that guarantee you don't lose are AGAINST the current spirit and the former letter of the law). However, the laws apply equally to someone who owns 90% of the shares (who is in a position to abuse an IPO and M&A) and 0.1% of the shares (who is likely an employee receiving RSU or options, has zero control, and likely not even any finances to draw upon) The tax law is insane, the security regulations are complicated, and their interplay is ludicrously insanely crazy. Whenever you see people saying "oh, it's very simple - you just didn't get the right advice" you can be sure that they have no idea what they are talking about - either they didn't have to deal with it, or they weren't aware they were doing something illegal.