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Business, Economics, and Tax Policy 8: Bezos Takes Over the World

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Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

Tax question for you geniuses.

We get 15% off stock in our employee stock program through monthly stock options.

It tells us we have to pay regular income taxes on the lesser of:
  1. the difference between FMV at the grant date and the discounted price
  2. excess (if any) of the price I sell over the price I bought it at.

Assume I've held the stock for two years after purchase, so it's fully qualified.

Let's consider the two scenarios:

Lot 1:
FMV at purchase date: $100
Purchase price: $85
FMV at grant date (which I assume is the beginning of the offering period, which is the entire month): $90
Sell Today at $110

Lot 2:
FMV @ purchase: $100
Purchase Price: $85
FMV @ grant: $90
Sell tomorrow at $80

Do I have the following correct:
Lot 1: regular income = MIN( $90-$85=$5 , $110-$85=$25) = $5 ----- Capital gains: $110-$85 = $15
Lot 2: regular income = MIN( $90-$85=$5 , $80-$85=-$5) = -$5?? ----- Capital loss: -$5??

Is that right? Because I'm confused if that second scenario is applicable to regular income (losses?) or capital losses. Or would I still have to pay regular income taxes on the $90-$85=$5 and I get to take -$5 as a capital loss?
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

dxmnkd316 said:
Tax question for you geniuses.

We get 15% off stock in our employee stock program through monthly stock options.
Click to expand...

Stop right there. Anybody who's receiving stock options is a dirty rotten PLUTE!!!! :mad: ;)
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

Rover said:
Stop right there. Anybody who's receiving stock options is a dirty rotten PLUTE!!!! :mad: ;)
Click to expand...

Ha! Yeah, except this isn't an option in the traditional plut way. THis is an option granted for a month, between 3 and 15% of your salary and only 15% discount (with several exceptions).

Everyone in the company is eligible unless they own 5% outstanding shares, have already bought $25k in stock, or some otherwise unobtainable hurdle.
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

We have a discount ESPP, too. Helps keep investments diversified while giving employees who buy-in a reason to give a sheet about the company's performance.

Ours is different though, it is a payroll deduction held in escrow for six months. At which time they buy all the whole shares they can for you at a 15% discount from the current list price, and any remainder is returned to your next check as taxable income.
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

FadeToBlack&Gold said:
We have a discount ESPP, too. Helps keep investments diversified while giving employees who buy-in a reason to give a sheet about the company's performance.

Ours is different though, it is a payroll deduction held in escrow for six months. At which time they buy all the whole shares they can for you at a 15% discount from the current list price, and any remainder is returned to your next check as taxable income.
Click to expand...

We have both a stock purchase plan that works similar to yours, and a unitized stock fund for use within the 401(k) plan - for the non-investors out there, a unitized fund allows you to purchase partial shares of the company's stock, similar to how mutual funds work.
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

FadeToBlack&Gold said:
We have a discount ESPP, too. Helps keep investments diversified while giving employees who buy-in a reason to give a sheet about the company's performance.

Ours is different though, it is a payroll deduction held in escrow for six months. At which time they buy all the whole shares they can for you at a 15% discount from the current list price, and any remainder is returned to your next check as taxable income.
Click to expand...

Same here. At worst, you get 15% on a six month investment, hard to beat that return.
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

I don't know what kind of outfits you all work for but here we're given stock awards, none of this discounted purchase price nonsense! ;)
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

Rover said:
I don't know what kind of outfits you all work for but here we're given stock awards, none of this discounted purchase price nonsense! ;)
Click to expand...

One does not exclude the other.
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

Rover said:
I don't know what kind of outfits you all work for but here we're given stock awards, none of this discounted purchase price nonsense! ;)
Click to expand...

At ours they just give us minutes.

<img src="https://i.vimeocdn.com/video/763893528_1280x720.jpg" height=300>
 
Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

Schools are just another business.

College Board corporation that owns test scores sells student data to schools.
College Board recorded $100 million in revenue from its business that includes selling student data in 2017, according to the latest tax return available, up from $63 million in 2010.

...

Students are asked before taking College Board’s tests if they want to make their information available to schools. Ms. Johnson said it was not clear to her what the information would be used for, but she hoped schools that were interested in her would send mail. She said she didn’t know her data would be monetized.
Click to expand...


The schools target these students, knowing their scores and knowing they won't get in.
Jori Johnson took the practice SAT test as a high-school student outside Chicago. Brochures later arrived from Vanderbilt, Stanford, Northwestern and the University of Chicago. The universities’ solicitations piqued her interest, and she eventually applied.
Click to expand...

The students apply and are rejected.
A few months later, she was rejected by those and three other schools that had sought her application, she said. The high-school valedictorian’s test scores, while strong by most standards, were well below those of most students admitted to the several schools that had contacted her.
Click to expand...


This improves the schools' exclusivity score.
Each year, 1,900 schools and scholarship programs buy combinations from among 2 million to 2.5 million names, College Board said, declining to say how many names in total it sells. Schools target combinations of geography, socio-economic class and academic interests. A college could buy a list of, say, soccer-playing Caucasian girls from Colorado, Wyoming and Montana who scored 1,200 to 1,300 on the PSAT, are interested in engineering and whose parents didn’t attend college.

Some schools buy a half-million names a year, admissions officers say. Tulane University said it bought about 300,000 names last year from College Board. Tulane’s applicant pool climbed 174% between 2002 and 2017 and its acceptance rate declined 62%, federal data show.

...

The (Vanderbilt) admissions office doubled its recruiting staff and increased the number of names bought from College Board to about 150,000 from 60,000 during her time at Vanderbilt, she said. ... Vanderbilt’s admissions rate has dropped to 11% in 2017, from 46% in 2002, according to an analysis of federal data. The number of Vanderbilt applicants rose more than three-fold over the same period.
Click to expand...


So, College Board gets money; schools improve their reputations, rejected students pay for it. A perfect scam.
 
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Re: Business, Economics, and Tax Policy 8: Bezos Takes Over the World

Kepler said:
Schools are just another business.

College Board corporation that owns test scores sells student data to schools. The schools send information to students. Students apply, generating more revenue for School Board. Applications are rejected, thus improving the schools' exclusivity score. College Board gets money; schools improve their reputations, rejected students pay for it. A perfect system.
Click to expand...

This should be a crime punishable by catapult.
 
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