91–100 of 116 posts
Taxes are just too darn complicated! It takes far too long to figure out what I legitimately owe! I shouldn't have to pay a professional or use a computer to figure that out.
Earlier quoted context omitted.
Allowing early exercise is a legal and accounting headache. Many small startups have a hard time even getting stock option agreements to employees. When you're new, small, and possibly don't even have an HR person you can't really spend time on frivolous things like early exercise.
I also thought that early exercise at a certain point could force a company to go public, but it's possible I'm mixing up laws. I think it had to do with how many share holders you could have, but I think that law also changed to not include employees as share holders.
"In order to mandate becoming an SEC reporting company, you now would have to have $10 million in assets and at least 2000 shareholders or 500 shareholders who are not accredited investors. Stock issued pursuant to an employee compensation plan would not be counted for this purpose."
0: https://investmentbank.com/summary-of-jobs-bill-and-update/
Earlier quoted context omitted.
You need to have clauses to specify retroactivity, otherwise you get into a world where the government has to wait for everyone alive to die before they're allowed to implement a new taxation plan. There have to be limits somewhere, and that's exactly what these clauses need to implement.
"...has to wait for everyone alive to die..." Certainly not. It's all based on the purchase/exercise/offering date. Let's take it to the extreme: if homicide had been legal, and society decided we needed to outlaw it, it stands to reason that homicide committed before the law was enacted would not be prosecuted, but only those cases happening one or after that date.
Earlier quoted context omitted.
I would never work for a company that doesn't allow early exercise. Whether or not you plan to do it, you have to wonder about the attitude of those in charge if they don't allow early exercise.
Allowing early exercise is a legal and accounting headache. Many small startups have a hard time even getting stock option agreements to employees. When you're new, small, and possibly don't even have an HR person you can't really spend time on frivolous things like early exercise.
Oh come on. The absolute last thing we need are more things making it harder for people to keep the options they earned after leaving the company.
You're right! Which is why getting rid of AMT will actually make it significantly easier.
Earlier quoted context omitted.
You need to have clauses to specify retroactivity, otherwise you get into a world where the government has to wait for everyone alive to die before they're allowed to implement a new taxation plan. There have to be limits somewhere, and that's exactly what these clauses need to implement.
"...has to wait for everyone alive to die..." Certainly not. It's all based on the purchase/exercise/offering date. Let's take it to the extreme: if homicide had been legal, and society decided we needed to outlaw it, it stands to reason that homicide committed before the law was enacted would not be prosecuted, but only those cases happening one or after that date.
Tax law isn't so clear. There's when you were granted the shares, when you acquired them (which may or may not be a taxable event, depending, among other things, on whether there's a spread between strike price and FMV), when you sold them (which is a taxable event), and when the law was enacted. There are probably yet other subtleties beyond those.
The grandfather clause covers the case when the enactment date falls amongst the others. ISOs purchased before the enactment but sold after. ISOs granted before the enactment, but purchased after. Double-triggers. Are you sure you know how the law applies, and what your tax liability is, without explicit statute to that effect, in all of those cases — or others I haven't listed, or even imagined? Is your accountant? Are you willing to bet an audit on that?
EDIT: phrasing
Honestly, everyone's just trying to game the system. Someone figures out a way to game the tax code, and then the laws get written to support those games. Taxes are just too darn complicated! It takes far too long to figure out what I legitimately owe! I shouldn't have to pay a professional or use a computer to figure that out.
While I understand this sentiment, I feel that a complicated tax code (or legal code in general) is just where countries end up going as they become larger and more important in the day-to-day lives of its citizens. All the various financial situations in this country are incredibly complicated.
Perhaps we should take a similar route as public defenders (not in practice but in theory, public defenders are horribly under-funded at the moment). The government could provide a tax management program for the general public that does the basics for you. Basically if you qualify for a 1040-EZ you can just use some IRS front-end system. If you have a more complicated situation, then accountants are always available.
I'm frankly disappointed our governments have not done more with the Internet.
Overall I think average comp full time employees at eaely stage startups will be a big beneficiary. They won't hit the exercise threshold, AMT will be gone, and ISO tax benefits and 409A valuation will remain. One problem I see is that the extended exercises that are popular these days convert from ISO to NQOs, so I wonder what that treatment will be like. Contractors lose some flexibility over NQOs, but imho they we…
> AMT will be gone Trump is doing this to help himself. I read somewhere that he got hit pretty bad on AMT recently.
Trump reducing the AMT for himself seems somewhat unlikely, because:
= The plan(s) are written by the House and Senate, not the administration.
- he doesn't seem to have given any relevant input to these tax plans except asking for lower corporate tax rate (which he hot only partially)
- AMT has so many opponents among Republican donors, Trump just doesn't need to get involved.
- Trump was hit by AMT because he had large losses that are deductible over a certain number of years. Don't remember the number, but I seem to remember they have run out by now. He'd need a new bankruptcy to keep going. And no, morally doesn't count.
- I'm not sure if he is still motivated by money as much as he used to be. It seems to always have been a plot to get recognition by Manhattan's elites, and therefore would have been eclipsed by his other failed attempt, namely politics.
Honestly, everyone's just trying to game the system. Someone figures out a way to game the tax code, and then the laws get written to support those games. Taxes are just too darn complicated! It takes far too long to figure out what I legitimately owe! I shouldn't have to pay a professional or use a computer to figure that out.
> Taxes are just too darn complicated! While I understand this sentiment, I feel that a complicated tax code (or legal code in general) is just where countries end up going as they become larger and more important in the day-to-day lives of its citizens. All the various financial situations in this country are incredibly complicated. Perhaps we should take a similar route as public defenders (not in practice but in t…
Really, what should happen is that the IRS mails you your taxes already filled out, you check for errors and fill in the things that aren't reported, and mail it back. This would kill TurboTax's business, so they lobby against it.
Earlier quoted context omitted.
you're right that it would be more fair to keep AMT, but that's only because of the complexity of the tax code with all of its deductions and loopholes. but i disagree that the tax plan is not designed to be dstructive. the bill is tax gerrymandering at it's finest--designed primarily to boost the republican party, it's cronies, and especcially trump himself, while punishing all others, including the poor and powerle…
> let's entirely remove the ability to move income and loss recognition through time for tax purposes That would be incredibly stupid. It would mean that two companies could pay different amounts of tax over a given period simply based on whether they ran losses some years or booked consistent profits. Loss recognition through time isn't a crazy "loophole"--it's the mathematical byproduct of the fact that you're samp…
you'll need to explain how it's "incredibly stupid". you allude to one of the potential consequences being differential taxation (which you didn't explain very well; but yes, losses in some taxing periods could mean you pay more in overall tax for the same total income over many tax periods). that's part of the "more complicated than it sounds" caveat in my prior post.
but unlike you, i don't think it's all bad. for one, it would disincentivize excessive risk-taking (which lead to losses). and it would better align incentives between managers, owners and employees: it would be harder for executives to inflate income in one quarter and recognize the losses in another for the purpose of realizing undeserved bonuses for themselves. would that be so bad?
(besides, it's already the norm that companies have variable income and pay different amounts of tax over a given period of time for the same overall income--e.g., the apple imbroglio).