# [ExI] Mathematical Help with Bitcoin historical curve future projection? (was re: Long Term Bitcoin Catastrophe)

spike spike at rainier66.com
Mon Jun 24 21:11:37 UTC 2013

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From: extropy-chat-bounces at lists.extropy.org
[mailto:extropy-chat-bounces at lists.extropy.org] On Behalf Of Gordon
Sent: Monday, June 24, 2013 1:31 PM
To: ExI chat list
Subject: Re: [ExI] Mathematical Help with Bitcoin historical curve future
projection? (was re: Long Term Bitcoin Catastrophe)

spike <spike at rainier66.com> wrote:

>>.This may sound like an exaggeration, but it isn't.  I have a young friend

>who in 1996 was paid 24k and the rest of his 200k salary was paid in
>options.  The above scenario played out, his 200k\$ in options became
>valueless, he ended up with income tax bills totaling over 60k in a year in
>which he only earned 24k, most of which went for apartment rental.  He and
>all his colleagues practically lived in that office, but all went bust from
>being paid in toxic assets.

>.That doesn't sound right. Perhaps your friend found himself in a unique
situation, but in general employee stock options are not taxed until they
are exercised.

>."Because most employee stock options are non-transferable, are not
immediately exercisable although they can be readily hedged to reduce risk,
the  <http://en.wikipedia.org/wiki/Internal_Revenue_Service> IRS considers
that their 'fair market value' cannot be 'readily determined', and therefore
'no taxable event' occurs when an employee receives an option grant."

>.http://en.wikipedia.org/wiki/Employee_stock_option#Taxation

>.Gordon

Good, sounds like this was fixed.  As I understand it, in 1996, the options
were transferable, could be exercised at the time they were issued.  The
options were to buy shares at ten for a stock that was at that time worth
twelve dollars.  This startup claimed these were worth two dollars each, and
issued them to the employees at that time, as pay.  But the guy who owned
the company was the one who was indirectly buying up the stock and keeping
its value at 12.  Those getting the options really couldn't sell them, for
that would signal they were selling stock in their own product, which would
cause its price to plummet.  The company, and subsequently the tax man,
argued that the options were worth 2 bucks each.  But someone did try to
cash them out, the company owners stopped propping up the price, the share
values dropped below ten, the remaining options became worthless, the guys
went away with nothing.  Well, nothing except a huge tax bill from both
California and the US.  They were fighting it when they left town.  I didn't
hear how it came out.

spike

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