Re:San Francisco Wants to Tax Your Stock Options – All of Them
by ChuckMcM on Friday February 18, 2011 @04:07PM
(#2237269)
Its a crazy idea, and I agree with the author that implementing it would be suicide for San Francisco. That being said, the existing system of 'employee stock purchase programs' or ESPPs where employees are required to tell the company when they sell them (even if they are no longer with the company) if they hold them for less than 2 years, gives us a hint of how San Francisco might try to implement this.
Company X issues a stock option and records the grant, employee exercises the option and Company X is required to pay 1.5% of the gain defined as the difference between the exercise price and the fair market price at the time of exercising) as tax when its exercised. This 'paper' gain is subject to the same taxes it would seem as AMT which has a similar "your liable for the tax even if you didn't get the gain" pain for tech employees.
Restricted stock would no doubt be taxed at issue time, I would be surprised if it wasn't already but I'm not an accountant.
Company X issues a stock option and records the grant, employee exercises the option and Company X is required to pay 1.5% of the gain defined as the difference between the exercise price and the fair market price at the time of exercising) as tax when its exercised. This 'paper' gain is subject to the same taxes it would seem as AMT which has a similar "your liable for the tax even if you didn't get the gain" pain for tech employees.
Restricted stock would no doubt be taxed at issue time, I would be surprised if it wasn't already but I'm not an accountant.