<html><body><div style="color:#000; background-color:#fff; font-family:times new roman, new york, times, serif;font-size:12pt"><div style="font-family: 'times new roman', 'new york', times, serif; font-size: 12pt;"><span style="font-family: Arial; font-size: 13px;">spike <spike@rainier66.com> wrote:</span><br></div><div style="color: rgb(0, 0, 0); background-color: transparent; font-style: normal; font-size: 16.363636016845703px; font-family: 'times new roman', 'new york', times, serif;"><span style="font-size: 12.727272033691406px;"><font face="Arial"><br></font></span></div><div style="color: rgb(0, 0, 0); background-color: transparent; font-style: normal; font-size: 12.727272033691406px; font-family: Arial;"><span style="font-size: 12.727272033691406px;"><font face="Arial">></font></span><span style="font-family: 'times new roman', 'new york', times, serif; font-size: 12pt;">This may sound like an exaggeration, but it isn't. I have a
young friend</span><br></div><div style="font-family: 'times new roman', 'new york', times, serif;"><div style="font-family: 'times new roman', 'new york', times, serif;"><div class="y_msg_container" style="font-family: 'times new roman', 'new york', times, serif; font-size: 12pt;">>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. </div><div class="y_msg_container" style="font-family: 'times new roman', 'new york', times, serif; font-size: 12pt;"><br>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 style="font-family: sans-serif; font-size: 13px; line-height: 19.1875px;">"Because most employee stock options are non-transferable, are not immediately exercisable although they can be readily hedged to reduce risk, the </span><a href="http://en.wikipedia.org/wiki/Internal_Revenue_Service" title="Internal Revenue Service" style="text-decoration: none; color: rgb(11, 0, 128); background-image: none; font-family: sans-serif; font-size: 13px; line-height: 19.1875px;">IRS</a><span style="font-family: sans-serif; font-size: 13px; line-height: 19.1875px;"> considers that their 'fair market value' cannot be 'readily determined', and therefore 'no taxable event' occurs when an employee receives an option grant."</span></div><div class="y_msg_container"><span style="font-family: sans-serif; font-size: 12.727272033691406px; line-height: 19.176136016845703px;"><br></span></div><div
class="y_msg_container"><span style="font-family: sans-serif; font-size: 12.727272033691406px; line-height: 19.176136016845703px;"><a href="http://en.wikipedia.org/wiki/Employee_stock_option#Taxation">http://en.wikipedia.org/wiki/Employee_stock_option#Taxation</a><br></span><br>Gordon<br><br></div> </div> </div> </div></body></html>