House Passes Employee Stock Options Bill Aimed at Startups
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House Passes Employee Stock Options Bill Aimed at Startups
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Re: House Passes Employee Stock Options Bill Aimed at Startups
#2This sounds great, though requiring "offering 80% of the workforce stock" and excluding highest paid executives seems vague - is this at time of hiring, when stock is issued, fully vested, when taxes are due, somewhere inbetween? I parted ways with a startup in the valley last year and exercised some shares on January 13th. If I had exercised just two weeks earlier, I'm told I would've been hit with north of 50k in AMT, I have until next year to figure it out now but I wonder if I'm eligible. Also curious how long it typically takes to get from house, through the senate and passed.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#3Nice to see tax laws for the rich can get passed, but substantive change to do with criminal justice, healthcare etc go nowhere.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#4This sounds great, though requiring "offering 80% of the workforce stock" and excluding highest paid executives seems vague - is this at time of hiring, when stock is issued, fully vested, when taxes are due, somewhere inbetween? I parted ways with a startup in the valley last year and exercised some shares on January 13th. If I had exercised just two weeks earlier, I'm told I would've been hit with north of 50k in A…
Sounds like it's 80% of employees must have been offered stock in the year you began employment.
My guess is that this applies in most common cases, although I wonder what the situation they were trying to guard from was...
Re: House Passes Employee Stock Options Bill Aimed at Startups
#5Nice to see tax laws for the rich can get passed, but substantive change to do with criminal justice, healthcare etc go nowhere.
This bill simply defers the taxes till actual gains are realized, instead of requiring them when options are exercised.
Ideally, this means more employees can actually act on their options, instead of just "the rich" as you imply.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#6The bill text is here and is pretty easy to decipher: https://www.congress.gov/bill/114th-congress/house-bill/5719
Re: House Passes Employee Stock Options Bill Aimed at Startups
#7Nice to see tax laws for the rich can get passed, but substantive change to do with criminal justice, healthcare etc go nowhere.
The actual bill text certainly comes off to me as looking to help the common-worker -- definitely not "the rich" / executives / owners.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#8The bill text is here and is pretty easy to decipher: https://www.congress.gov/bill/114th-congress/house-bill/5719
Why all the goofy eligibility rules? Just get rid of the rule where exercising stock options counts as income under the AMT(1). It's line 14 in Part 1 of Form 6251. Just get rid of it!
When people talk about our tax system being too complicated bills like this are why.
1. For that matter we should get rid of the AMT entirely. The fact that we have 2 separate tax systems for individuals is insane. That's a bigger story though.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#9Can someone explain: if you exercise and hold the shares (eg leave the company) do you owe tax after year seven, even if the shares remain illiquid?
That's the core issue: the IRS is taxing individuals on truly illiquid assets.
Re: House Passes Employee Stock Options Bill Aimed at Startups
#10Most employees get hit by the AMT and the step up in basis when exercising their incentive employee stock options, and from just skimming the bill, I don't see how that is prevented.