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Re: [RT] Tech workers upset that they owe taxes on underwater options



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I'm not a tax accountant, nor do I play one on TV, but I believe the tax
law in question violates a fundamental principle of taxation in the US
-- that you pay tax only upon realisation of the income.

(What about futures? The variation margin is considered constructive
receipt for tax purposes.)

(What about the imputed interest on zero coupon bonds? Yep, they also
violate the principle...)

I think it was a reasonable (but incorrect) assumption that if one
thought the company was a good company, one would be able to hold the
shares and not have a tax liability. Particularly since there seems to
have been no requirement that the company withhold to cover your
liability.

Also, if you reserach the issue a bit, you'll discover that the
individuals with the most serious problems are not the 'dot-com
millionaires', who were indeed often well paid on a cash basis too, but
secretaries and other support people who received (for them) huge
bonuses of $50k or $100k, and now have cash obligations of about one
third that amount to the Treasury, with an offsetting loss they can take
at a rate of $3k per year, since they have few other capital gains
available. They're the ones who got screwed.

Regards
DanG

EAdamy wrote:
> 

> 
> 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
>

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