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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 11/10/2008 : 15:55:48
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The US has gone beyond just bailing out the banks and insurance companies, now the dot com investors are getting a bailout (of sorts.)
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NOVEMBER 10, 2008 Bailout Bill Provided Tech Workers With Tax Relief for Stock Options
By SCOTT THURM
Excerpt-
The recent $700 billion rescue package to bolster the financial system also threw a lifeline to thousands of people who owed taxes on stock options dating to the technology-stock crash of 2000.
Some individual tax bills exceeded $1 million for shares that later plunged in value. A five-paragraph section tucked into the bailout bill effectively erased those taxes, at an estimated cost to the Treasury of $2.3 billion.
Most of the people affected weren't top executives, but lower-level workers and middle managers at tech firms in the 1990s. Stock options give holders the right, but not the obligation, to purchase stock at a preset price, known as the strike price. For most stock options, holders must pay income tax on the difference between the strike price and the share price when the options are exercised, or converted to shares.
But the options covered by this law worked differently. They allowed holders who kept the shares for a year after exercising the option to treat the income as a capital gain, which is taxed at a lower rate than ordinary income.
But the options also were subject to the alternative minimum tax, a parallel tax system established in the 1960s that treats as income the value of options when they are exercised. The sharp run-up, and subsequent plunge, in tech shares between 1999 and 2001 left many owing taxes on stock that ultimately held little value. Many of the workers say they received little, or incorrect, financial advice on how the AMT would affect them.
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Bailouts for everybody, goodbye moral hazard and investor risk.
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
 Posted - 11/10/2008 : 16:49:07
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Changing the law after the fact....how convienent......
Is anyone else ready to march on DC with torches and pitchforks? |
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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Cody8404
Penny Hoarding Member
USA
602 Posts |
Posted - 11/10/2008 : 17:12:58
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| Do you have a pitchfork? I'll buy it for 1,000,000 zimbabwe$. |
Awake, O kings of the earth! Come ye, O, come ye, with your gold and your silver, to the help of my people, to the house of the daughters of Zion, to the help of the people of the God of this Land even Jesus Christ. |
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Bailout for dot bombs
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