Mike, Q Public who put $5k into RealNetworks and saw it rise to $105K but drop back to $5k could sell or not sell today and own nor benefit nothing.
An employee who exorcised options that cost $5k and were worth $105k on that peak day but held today owes $28,000 in taxes (or more? I don't know the rate used for AMT).
That doesn't look the same to me.
I still believe it's an individual's responsibility to know how to account for their compensation, investments, etc., but just because the tax code is availble to be read doesn't make it right, just, or anything else. It just means the IRS can and will collect it from you.
Note that if in the former case the employees options rise in value from $105k to $205k, then they sold in late Dec. They'd now owe $56k in capital gains taxes (unless it's considered ordinary income, in which case it would be more). The point is, they don't get something for nothing -- they pay tax on the further gain, same as JQPublic. JQPublic gets to take a loss, though, and they don't, simply because they held it into 2001. That's my beef... holding it into the next year triggers positive taxation on losses. What's the point of that, to further punish them for their lousy options? Talk about massive injury to insult. |
