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Tax Season 2012: Work No Longer Pays

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  • #91
    Re: Tax Season 2012: Work No Longer Pays

    Originally posted by Almington View Post
    The issue with an Emergency fund is what potential types of "emergencies" can you face.

    As a young single who rents, with the exception of a major medical problem, I can't foresee any reasons why I need to have more than $10k in an emergency fund.

    For someone who actually owns a home, you have many potential expenses to consider: major maintenance and repairs, the costs associated with selling or carrying two residences. You have more responsibilities, thus you need a larger emergency fund.
    Exactly. I think you and I share a lot of the same ideas on fiscal priorities and responsibility.

    Anyways, back on the subject of taxes. This guy isn't going to have a fun time filing next year:

    http://money.cnn.com/2012/02/07/tech...berg_tax_bill/

    OUCH!!!
    Code:
    As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
    Originally posted by SanTropez
    May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
    Originally posted by bigblue_dl
    I don't even know how to classify magic vagina smoke babies..
    Originally posted by Kepler
    When the giraffes start building radio telescopes they can join too.
    He's probably going to be a superstar but that man has more baggage than North West

    Comment

    • #92
      Re: Tax Season 2012: Work No Longer Pays

      Originally posted by dxmnkd316 View Post
      OUCH!!!
      Yeah, poor guy....

      Reminds me the time my uncle was starting a business and needed help from a lawyer. The business was strapped, so he cut the lawyer a deal for partial ownership of the company. Over time, he became a bit agitated that perhaps he had paid the lawyer too much, until my father pointed out, "If I were you, I would hope that I did make that lawyer a millionaire, because that would make me a multi-millionaire!"
      If you don't change the world today, how can it be any better tomorrow?

      Comment

      • #93
        Re: Tax Season 2012: Work No Longer Pays

        But but but...

        BILLIONAIRES DON'T PAY TAXES!!!!
        Code:
        As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
        Originally posted by SanTropez
        May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
        Originally posted by bigblue_dl
        I don't even know how to classify magic vagina smoke babies..
        Originally posted by Kepler
        When the giraffes start building radio telescopes they can join too.
        He's probably going to be a superstar but that man has more baggage than North West

        Comment

        • #94
          Re: Tax Season 2012: Work No Longer Pays

          Originally posted by dxmnkd316 View Post
          But but but...

          BILLIONAIRES DON'T PAY TAXES!!!!
          He could pay zero in taxes by not buying shares of Facebook for $0.06 each, he could also save ~$500 million by not living in CA. Do I think that he should have to pay full income tax rate on stock that he would continue to hold, No. This is just one more example of how messed up the tax system is.

          Comment

          • #95
            Re: Tax Season 2012: Work No Longer Pays

            Originally posted by Almington View Post
            He could pay zero in taxes by not buying shares of Facebook for $0.06 each, he could also save ~$500 million by not living in CA. Do I think that he should have to pay full income tax rate on stock that he would continue to hold, No. This is just one more example of how messed up the tax system is.
            He could also save a bunch of money on his car insurance by switching to Geico.

            You have to explain this whole paying taxes on holding stock, though... (unless dividends are involved)

            Comment

            • #96
              Re: Tax Season 2012: Work No Longer Pays

              Originally posted by FlagDUDE08 View Post
              He could also save a bunch of money on his car insurance by switching to Geico.

              You have to explain this whole paying taxes on holding stock, though... (unless dividends are involved)
              It sounds like he has to report the value of the stock option (Actual value-option price) as income and pay taxes on it even if he doesn't sell any of the stock. Thus, to cover the taxes he will have to sell roughly 40% of the stock. I don't understand why that is considered regular income, but if you operate a hedge fund your income is taxed as capital gains because of the carried interest exception.

              Comment

              • #97
                Re: Tax Season 2012: Work No Longer Pays

                Originally posted by Almington View Post
                It sounds like he has to report the value of the stock option (Actual value-option price) as income and pay taxes on it even if he doesn't sell any of the stock. Thus, to cover the taxes he will have to sell roughly 40% of the stock. I don't understand why that is considered regular income, but if you operate a hedge fund your income is taxed as capital gains because of the carried interest exception.
                Oh, non-qualified option. It's because the company is basically handing you (price - 0.06 per share) in money to invest, and so it is considered income. I'm not sure how you'd report that, though.

                Comment

                • #98
                  Re: Tax Season 2012: Work No Longer Pays

                  Originally posted by dxmnkd316 View Post
                  Exactly. I think you and I share a lot of the same ideas on fiscal priorities and responsibility.

                  Anyways, back on the subject of taxes. This guy isn't going to have a fun time filing next year:

                  http://money.cnn.com/2012/02/07/tech...berg_tax_bill/

                  OUCH!!!
                  Is he going to use TurboTax?
                  CCT '77 & '78
                  4 kids
                  8 grandsons (BCA 7/09, CJA 5/14, JDL 8/14, JFL 6/16, PJL 7/18, TJL 1/22, BRL 6/23, NDL 2/24)
                  2 granddaughters (EML 4/18, LCL 5/20)

                  ?€Any society that would give up a little liberty to gain a little security will deserve neither and lose both.?€
                  - Benjamin Franklin

                  Banned from the St. Lawrence University Facebook page - March 2016 (But I got better).

                  I want to live forever. So far, so good.

                  Comment

                  • #99
                    Re: Tax Season 2012: Work No Longer Pays

                    Are you guys sure about that?

                    Why aren't employee stock purchase programs immediately taxed then...? Is that a specific type of program that isn't anything like this or...?
                    Code:
                    As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                    Originally posted by SanTropez
                    May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                    Originally posted by bigblue_dl
                    I don't even know how to classify magic vagina smoke babies..
                    Originally posted by Kepler
                    When the giraffes start building radio telescopes they can join too.
                    He's probably going to be a superstar but that man has more baggage than North West

                    Comment

                    • #100
                      Re: Tax Season 2012: Work No Longer Pays

                      Originally posted by dxmnkd316 View Post
                      Are you guys sure about that?

                      Why aren't employee stock purchase programs immediately taxed then...? Is that a specific type of program that isn't anything like this or...?
                      Employee Stock Ownership Plans (ESOP) is a special kind of vehicle. An ESOP Trust is set up to purchase the stock from existing ownership and hold it on behalf of the employees. There is no immediate direct ownership by any particular individual. They pay income tax at ordinary income tax rates when the terms of the plan are met (usually they don't get actual stock when they cash out, just cash). There are all sorts of technicalities that I prefer to gloss over.

                      With Zuckerberg, he has some kind of conditional option, not sure how to explain it. With a vested option, I may be wrong, but if I understand correctly, when you exercised them, I think from $0 to the option price is ordinary income and from the option price to the selling price is capital gains tax but only when you sell. Zuckerberg might have some of those as well, these are some other kind of option that has some funky rule such that the entire IPO price is taxable as ordinary income; however, if he holds on to some those shares (e.g., he sells 40% and keeps 60%) then any gain above the IPO price is taxed as capital gain and only at time of sale.

                      There actually is a sensible reason behind it, though don't ask me to fully explain, or defend, it.

                      I had a related situation on a much much smaller scale when my life insurance company demutualized, and we received a few shares of stock.
                      "Hope is a good thing; maybe the best of things."

                      "Beer is a sign that God loves us and wants us to be happy." -- Benjamin Franklin

                      "Being Irish, he had an abiding sense of tragedy, which sustained him through temporary periods of joy." -- W. B. Yeats

                      "People generally are most impatient with those flaws in others about which they are most ashamed of in themselves." - folk wisdom

                      Comment

                      • #101
                        Re: Tax Season 2012: Work No Longer Pays

                        No, I definitely own the shares... I have to hold them for a two-year period, but I own them. According to our website, I don't owe taxes until I sell. Regardless of how long I hold them.
                        Code:
                        As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                        Originally posted by SanTropez
                        May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                        Originally posted by bigblue_dl
                        I don't even know how to classify magic vagina smoke babies..
                        Originally posted by Kepler
                        When the giraffes start building radio telescopes they can join too.
                        He's probably going to be a superstar but that man has more baggage than North West

                        Comment

                        • #102
                          Re: Tax Season 2012: Work No Longer Pays

                          Originally posted by dxmnkd316 View Post
                          Are you guys sure about that?

                          Why aren't employee stock purchase programs immediately taxed then...? Is that a specific type of program that isn't anything like this or...?
                          Employee stock purchase programs are generally incentive stock options, which means that the employee does not have to pay any taxes on the stock until it is sold but the employer does not get to deduct the value on it's corporate income tax.

                          What Zuckerberg has are non-qualified stock options which require that he pay ordinary income tax on the difference between the option price and the market price and Facebook will get to deduct that difference on their corporate tax statement.

                          Comment

                          • #103
                            Re: Tax Season 2012: Work No Longer Pays

                            Originally posted by Almington View Post
                            Employee stock purchase programs are generally incentive stock options, which means that the employee does not have to pay any taxes on the stock until it is sold but the employer does not get to deduct the value on it's corporate income tax.

                            What Zuckerberg has are non-qualified stock options which require that he pay ordinary income tax on the difference between the option price and the market price and Facebook will get to deduct that difference on their corporate tax statement.
                            Got it. Thanks!
                            Code:
                            As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                            Originally posted by SanTropez
                            May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                            Originally posted by bigblue_dl
                            I don't even know how to classify magic vagina smoke babies..
                            Originally posted by Kepler
                            When the giraffes start building radio telescopes they can join too.
                            He's probably going to be a superstar but that man has more baggage than North West

                            Comment

                            • #104
                              Re: Tax Season 2012: Work No Longer Pays

                              Here's a hypothetical...

                              If I sell a few tickets on StubHub for above face value, is that profit taxable? What if I do that a few hundred times and clear a few thousand dollars.

                              Hypothetically.

                              Comment

                              • #105
                                Re: Tax Season 2012: Work No Longer Pays

                                Originally posted by Priceless View Post
                                Here's a hypothetical...

                                If I sell a few tickets on StubHub for above face value, is that profit taxable? What if I do that a few hundred times and clear a few thousand dollars.

                                Hypothetically.
                                95% sure that's treated as regular income.
                                Code:
                                As of 9/21/10:         As of 9/13/10:
College Hockey 6       College Football 0
BTHC 4                 WCHA FC:  1
                                Originally posted by SanTropez
                                May your paint thinner run dry and the fleas of a thousand camels infest your dead deer.
                                Originally posted by bigblue_dl
                                I don't even know how to classify magic vagina smoke babies..
                                Originally posted by Kepler
                                When the giraffes start building radio telescopes they can join too.
                                He's probably going to be a superstar but that man has more baggage than North West

                                Comment

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