4/16    http://www.latimes.com/business/wallstcal/20010413/t000031428.html
        Is this an accurate portrayal of how (incentive) stock options
        can get you screwed.  I.e.,
        (0) Your stock options are about to expire.
        (1) Your exercise price is 10 cents.
        (2) You exercise when the stock is worth $100 per share.
        (2a)You don't sell your stock, in hopes the price will shoot higher
            or you want to hold it a year for long-term cap gains
        (3) The stock falls to $1 per share.
        (4) Your tax liability is $99.90 * (# shares), regardless of
            the fact that the stock is now worth $1 per share.
        \_ The whole problem with this model is that it assumes that
           your failed to pay your taxes at the time of exercise. Now
           only a retard would do that. If you ask the broker to withhold
           40% for Fed, 10% for State and the min for ther other stuff,
           you will not get nailed on Apr 15.
           \_ Yeah right, take this advice from the motd.
           \_ I presume you "pay your taxes at the time of exercise" by
              selling enough shares at the time of exercise?
        \_ Why not sell your shares at the time you exercise your options?
           If you're not going to sell them then why exercise unless they
           are about to expire? You can always buy some back. --dim
           \_ Okay, I've amended the list.
           \_ Some people also want to utilize the lower federal tax rate of
              20% for long-term capital gain.
              \_ Okay, I've amended the list.
        \_ In what situation should the government EVER be able to tax a
           paper gain.  If I haven't made INCOME, how the HELL can this event
           be taxed with an INCOME TAX?
           be taxed with an INCOME TAX?  --scotsman
           \_ Simple. The options themselves were income. The company gave them
              to you. The value of the options is the spread at the time of
              exercise; underwater options are worthless. When you exercise,
              you're getting stock worth a certain value for less than that
              value, that's income. if they drop to 1% of that value that's
              a capital loss. There's no magic here people. If you buy stock
              that drops 99% you're fucked, welcome to the real world.
           \_ Simple.  This is unconstitutional.
           \_ It's taxed as Alternative Minimal Tax, not as Income Tax.
           \_ Damn, you made a killing by buying a $100 share for 10 cents
              and you are so greedy you want it taxed as long-term capital
              gains. You deserve what you get. I suppose if it went up to
              to $200 during the next year, you'd want all $200 taxed as
              long-term too.
              \_ Er..  No..  I want it treated as you would treat any income.
                 Paper gains are not income.  If you bought a $100 share for
                 10 cents, you didn't "make a killing."  You didn't "make"
                 anything.  You wouldn't make anything until you sold it, at
                 which point your income would be value less base cost, which
                 in this case would be the stock's worth - 10 cents.  Get a
                 fucking clue before you try to argue.  --scotsman
        \_ After a peek at form 6251, I'm truly amazed.  Stock Options
           exercised is the only item on that list that is not actual
           income, interest, or depreciation.  That's gotta be illegal.
           --scotsman