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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'> extropy-chat-bounces@lists.extropy.org [mailto:extropy-chat-bounces@lists.extropy.org] <b>On Behalf Of </b>Gordon<br><b>Sent:</b> Monday, June 24, 2013 1:31 PM<br><b>To:</b> ExI chat list<br><b>Subject:</b> Re: [ExI] Mathematical Help with Bitcoin historical curve future projection? (was re: Long Term Bitcoin Catastrophe)<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><div><div><p class=MsoNormal style='background:white'><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:black'>spike <<a href="mailto:spike@rainier66.com">spike@rainier66.com</a>> wrote:</span><span style='color:black'><o:p></o:p></span></p></div><div><p class=MsoNormal><span style='font-size:12.5pt;color:black'><o:p> </o:p></span></p></div><div><p class=MsoNormal><span style='font-size:9.5pt;font-family:"Arial","sans-serif";color:black'>></span><span style='font-size:9.5pt;font-family:"Arial","sans-serif";color:#1F497D'>>…</span><span style='color:black'>This may sound like an exaggeration, but it isn't. I have a young friend</span><span style='font-size:9.5pt;font-family:"Arial","sans-serif";color:black'><o:p></o:p></span></p></div><div><div><div><p class=MsoNormal style='background:white'><span style='color:black'>>who in 1996 was paid 24k and the rest of his 200k salary was paid in<br>>options. The above scenario played out, his 200k$ in options became<br>>valueless, he ended up with income tax bills totaling over 60k in a year in<br>>which he only earned 24k, most of which went for apartment rental. He and<br>>all his colleagues practically lived in that office, but all went bust from<br>>being paid in toxic assets. <o:p></o:p></span></p></div><div><p class=MsoNormal style='background:white'><span style='color:black'><br></span><span style='color:#1F497D'>>…</span><span style='color:black'>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.<br><br></span><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>>…</span><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:black'>"Because most employee stock options are non-transferable, are not immediately exercisable although they can be readily hedged to reduce risk, the </span><span style='color:black'><a href="http://en.wikipedia.org/wiki/Internal_Revenue_Service" title="Internal Revenue Service"><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#0B0080;text-decoration:none'>IRS</span></a></span><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:black'> considers that their 'fair market value' cannot be 'readily determined', and therefore 'no taxable event' occurs when an employee receives an option grant."</span><span style='color:black'><o:p></o:p></span></p></div><div><p class=MsoNormal style='background:white'><span style='color:black'><o:p> </o:p></span></p></div><div><p class=MsoNormal style='margin-bottom:12.0pt;background:white'><span style='font-size:9.5pt;font-family:"Arial","sans-serif";color:#1F497D'>>…</span><span style='font-size:9.5pt;font-family:"Arial","sans-serif";color:black'><a href="http://en.wikipedia.org/wiki/Employee_stock_option#Taxation">http://en.wikipedia.org/wiki/Employee_stock_option#Taxation</a><br></span><span style='color:black'><br></span><span style='color:#1F497D'>>…</span><span style='color:black'>Gordon</span><span style='color:#1F497D'><o:p></o:p></span></p><p class=MsoNormal style='margin-bottom:12.0pt;background:white'><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>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.<o:p></o:p></span></p><p class=MsoNormal style='margin-bottom:12.0pt;background:white'><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>spike<o:p></o:p></span></p></div></div></div></div></div></body></html>