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Don’t Tax Options and RSUs Upon Vesting

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Re: Don’t Tax Options and RSUs Upon Vesting

#111

Post by ydt »

austenallred wrote: post #73
nsxwolf wrote: post #70

Earlier quoted context omitted.

Can I give back my options if this bill passes? I'm literally sick now reading this. What I thought was a great part of my compensation package is literally going to bankrupt my family.

Yes you can just give them back, but I would be shocked if the bill passed this way. This clause wasn’t in the House version of the bill. Call your senator.

Why would you be shocked? There's all sorts of nasty things in these tax proposals for the less than wealthy. They are looking everywhere they can to find offsets to make the tax cuts for the donor class work under the budget rules.

Re: Don’t Tax Options and RSUs Upon Vesting

#112

Post by [deleted] »

ransom1538 wrote: post #69

"The current draft of the Senate Tax Reform Bill would tax stock options and RSUs upon vesting." Ok. I wouldn't panic here. Calm down. How shares are vested is up to the board. So, if this were to pass I would just walk into the CEO's office with a few employees and ask to change how shares vest to: "Upon the vesting schedule AND a written letter from the employee requesting vesting. If the letter isn't submitted the…

[deleted]

Re: Don’t Tax Options and RSUs Upon Vesting

#113

Post by nsxwolf »

briandear wrote: post #23
aresant wrote: post #7

"But, sadly, I don’t think this is really about what makes sense. It is about politics." Clearly this proposal is targeted directly at private SV and tech companies. And the mortgage deduction and state tax write off proposals are targeted at California / NY. Outside of just a big FU from the Republicans to largely Democratic states what is the end game? E.g. - what are the Republicans actually negotiating for, assum…

State tax write offs are fundamentally unfair. The US government effectively subsidized high tax states. A guy making $100k in Texas ought to have the same exact tax federal burden of a guy making $100k in New Jersey. As it stands now, those two guys pay a different amount to the federal government. That is unfair. A state can raise state taxes will little impact on residents however it results in lower tax revenue t…

Don't you have to do more work to make a claim about who is subsidizing who? How much does each state receive in federal grants and aid?

And the guy in Texas has more money in his pocket than the guy in New Jersey no matter what. It's a weird thing to get hung up on. Nobody ever talked about the fairness of this deduction before. This was cooked up as a GOP talking point in some smoke filled room somewhere. Class envy as a Republican tactic is a curious development.

Re: Don’t Tax Options and RSUs Upon Vesting

#115

Post by bdamm »

ransom1538 wrote: post #75
seattle_spring wrote: post #72

Earlier quoted context omitted.

Why would someone from a large publicly traded company panic? Shares already are taxed upon vest there.

Yep. That isn't about publicly traded companies. The only people that would panic is if you are in a startup that cannot exercise.

I'm under the belief that vest for tax purposes isn't until the share becomes liquid. If the startup can't exercise then, for tax purposes, has the share vested? I believe it has not (and have, in the past, filed taxes on this belief, with the support of my accountant.)

Re: Don’t Tax Options and RSUs Upon Vesting

#116

Post by vonmoltke »

oneshot908 wrote: post #45
austenallred wrote: post #21

Earlier quoted context omitted.

That’s the point of options though - most of the time that “cash” doesn’t exist to be paid out in bonuses. Options are a bet that it will exist in the future. Why do startups pay lower salaries than Facebook? Because Facebook throws around $200-300k salaries and doesn’t care. Startups can’t do that, so it promises a piece of the pie if the company becomes big and successful instead.

At this point, unless you're C-suite, most startups are a really bad bet compared to the BigCos paying out anywhere from $250K-$1M annually depending on your skill set and experience. What's happening now IMO is that the hot talent has figured this out and they have accepted positions at Tesla, Salesforce, Google, Facebook, Apple, or Amazon. That said, I know someone who walked away from a $10M package over 4 years t…

> At this point, unless you're C-suite, most startups are a really bad bet compared to the BigCos paying out anywhere from $250K-$1M annually depending on your skill set and experience.

I agree that if you can get into one of the established companies in the top quintile of the industry you are probably better off than if you joined a startup. I'd hazard a guess, though, that the startup jibs are easier to obtain and more plentiful than those BigCo jobs.

Re: Don’t Tax Options and RSUs Upon Vesting

#117

Post by t_fatus »

kolbe wrote: post #102
t_fatus wrote: post #51

Earlier quoted context omitted.

Options and RSUs gain value the day you pay for the underlying stocks, not the day you're allowed to buy a stock which could later in time become worthless. don't forget they're aimed at employees so they can share the value created by the company they work within, and that these employees will pay taxes in time when they extract any value from their companies

If they don't have any value, then you shouldn't have any problem with them going away. You obviously consider them valuable, or else you wouldn't be defending them.

Indeed the right to buy a stock is valuable, but as an employee / the state you should postpone the taxation to when the value is actually retrieved by the person you tax. It's a bit like saying 'You're house is worth X, you should be taxed regarding this price, even if you don't have yet made any profit'

Re: Don’t Tax Options and RSUs Upon Vesting

#118

Post by rb808 »

Surely if you have options or stock in an illiquid company where you can't sell it - they are worth zero on a mark-to-market basis, so you dont need to pay tax on it?

If you can easily sell them for a price it makes sense that you pay tax on it.

Re: Don’t Tax Options and RSUs Upon Vesting

#119

Post by nsxwolf »

kolbe wrote: post #100
austenallred wrote: post #46

Earlier quoted context omitted.

The value associated with them is illiquid. I can’t necessarily sell my stock options for what they’re “worth,” so taxing them at that level makes them pretty much worthless. It’s already taxed when I sell them - when I get dollars that I can spend. Taxing before then is (I hope) an oversight.

Would you be cool if you got taxed on the income tax scale upon selling them?

It would be better than my accountant telling me I need to cash out my 401k to pay for taxes on something I'm probably never going to be allowed to sell anyway.

Re: Don’t Tax Options and RSUs Upon Vesting

#120

Post by s73ver_ »

logfromblammo wrote: post #43
austenallred wrote: post #18

The importance of this change can’t be understated; this effectively kills compensation at startups in the form of equity, and would make startups completely unable to compete with incumbents. Anyone that has options at a company that grows quickly would be paying tens or hundreds of thousands in taxes to keep their equity, which is still effectively a very risky bet that a company will end up huge. No one would want…

What if your goal is for technical talent to prefer companies that make parts for the F-35 that actually function as intended, instead of companies that could be described as "Uber for cat-sitters" or "the Snapchat of Etsy-linked Tumblr posts" or "Pets.com with more tulip bulbs" or "like Facebook, except fronting for GRU instead of NSA"? In that case, it would meet that goal very well. What a pity it is that the tech…

At the same time, wouldn't that talent be equally wasted at "Uber for cat-sitters"?
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