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With all due respect to all the college educated, high tech workers who are
now the holders of under water options, I heartily disagree.
1) the high tech industry attracted option seeking employees in large
measure due to the lure of potentially outsized profits on options in lieu
of wages ... this was a gamble and any educated individual knows gambles can
go either way
2) no one force high tech workers to work for options and most were paid
rather decent cash wages to boot
3) these college educated, high tech workers might have seen the bubble had
they looked beyond their desire to get rich quick
4) the rules of the game i.e. the tax laws, were known well in advance and
it was the responsibility of those trading cash wages for prospective future
option profits to know the rules ... certainly one would expect adults to
have acquired knowledge regarding these trade-offs before accepting paper in
lieu of cash
5) any prudent individual (college educated or otherwise) would have
recognized the tax liability when incurred and sold enough stock to cover
the liability or, at the very least, sold enough stock to recognize losses
sufficient to mitigate the same-year tax liability
6) high tech workers were not the only exceptionally hard working employees
in this country ... younger employees of all professions typically work long
days in expectation of building a career ... the options game as played by
the majority of the high tech companies was widely abused to the detriment
of shareholders, taxpayers at large, and the economy of this country i.e.
high tech stock options were a critical leg of the bubble
7) this whole high tech bubble was a replay of the high tech bubble of the
late 60's and early 70's - options, IPO's, brokerage analysts run amuck, and
absurd stock valuations ... perhaps those who spent 4 years in college and
additional time in graduate school should sue the schools for not forcing
them to learn some lessons from economic history
Those who have tax liabilities on losing stock positions acquired via
options need to sell stock to cover the liabilities or recognize losses to
mitigate the liability. Those who took the gamble and banked profits are not
crying. Those who took the gamble and did not bank profits were in a
position to insure that the gamble did not turn into a loss. Instead they
chose hope over prudence and it is not the responsibility of the tax payers
to fix the problem. Some of life's lessons cost real money ...
Earl
----- Original Message -----
From: "John Hall" <jrhall@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, June 23, 2001 9:33 AM
Subject: Re: [RT] Tech workers upset that they owe taxes on underwater
options
> Options are part of the compensation given to an individual for hard work
> and success. The companies determine who and how many options an
individual
> gets not the individual. Most people who received them worked 12-14 hours
a
> day 5-7 days a week. I was one of them. Most people who received options
> did not work hard because of the options in front of them, five years out
I
> might add. These are people who for the most part have spent a minimum of
4
> years in college to get a degree and additional time in training or
graduate
> programs. These people are not option babies.
>
> The problem is one of greed by our government who want taxes on
non-existent
> income. The options are non-quals which are not taxed at time of
exercise.
> The options given by most companies now do take out taxes at time of
> exercise. Once an individual purchases the stock from an options grant
the
> taxable is the difference between the grant price and the current value of
> the stock on the date of exercise. Once the individual sells the stock
> gained from options exercised the taxes are adjusted to what the "real"
> profit or loss is. Most of the options from these companies are either at
> the money or under water now. A lot of the people who exercised options
and
> did not sell at the height are under water from the exercise price.
>
> You should be pointing your finger where the problem lies with the Federal
> government, not the individual. Bottom line for me on this issue is a
> socialist tax system that wants to re-distribute wealth in this country to
> those who neither took the risk nor the time to get educated nor worked to
> make the money. A congress that is so greedy that they define un-realized
> gains as income. What's really interesting is that companies pay taxes on
> the options and anyone getting the options pays taxes on that same money.
> The governments double dipping.
>
> By-the-way Ira, if I follow your logic you should pay taxes each time a
> trade you are in shows a profit before you have closed out the trade.
This
> is regardless of the final outcome of the trade. You can adjust the taxes
> after the trade is closed.
>
> "One of the option babies who isn't under water."
> John
>
> ----- Original Message -----
> From: "Ira Tunik" <irat@xxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Saturday, June 23, 2001 7:42 AM
> Subject: Re: [RT] Tech workers upset that they owe taxes on underwater
> options
>
>
> > They couldn't even sell enough stock to cover the taxes. that is real
> greed
> > and now we are supposed to pay.
> >
> > Me wrote:
> >
> > > Driving the economy into recession and raising living costs to insane
> > > levels wasn't enough for the tech industry, now the option babies are
> > > upset because their stock options are underwater and they owe big
> > > taxes. Sheese. I know people who have gotten into this situation
> > > and it all occurred because they were greedy. They didn't sell their
> > > options at exercise time, instead choosing to hold onto the stock so
> > > they would pay less taxes down the road. Will Congress succumb and
> > > bail them out like AG has bailed out the big companies that made the
> > > wrong decisions?
> > >
> > > The Valley's Tax Revolt
> > > By Scott Harris
> > >
> > > Tech workers are taking a big tax hit on their stock options. Will
> > > Congress come to the rescue?
> > > http://www.thestandard.com/article/0,1902,27355,00.html?nl=int
> > >
> > > To unsubscribe from this group, send an email to:
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> > >
> > >
> > >
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> >
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> >
> >
> >
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> >
> >
> >
>
>
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