
Trump tax bill Sec 3801 – Stock options become taxable upon vest - seattle_spring
According to the recently proposed tax overhaul, Section 3801, stock options would be taxable immediately upon vesting.<p>The bill is extremely copy&#x2F;paste unfriendly, but the full text is here: https:&#x2F;&#x2F;www.scribd.com&#x2F;document&#x2F;363309136&#x2F;Republican-Tax-Bill#download&amp;from_embed<p>The relevant section starts on page 295.<p><pre><code>  16 (a) IN GENERAL.—Any compensation which is de-
  17 ferred under a nonqualified deferred compensation plan
  18 shall be includible in the gross income of the person who
  19 performed the services to which such compensation relates
  20 when there is no substantial risk of forfeiture of the 
  rights
  21 of such person to such compensation.
</code></pre>
... and ...<p><pre><code>  24 The term &#x27;nonqualified deferred compensation
  25 plan&#x27; shall include any plan that provides—
  1 &#x27;&#x27;(i) a right to compensation based on
  2 the value of, or appreciation in value of, a
  3 specified number of equity units of the
  4 service recipient, whether paid in cash or
  5 equity, or
  6 &#x27;&#x27;(ii) stock appreciation rights or stock
  7 options.
</code></pre>
Can anyone who understands legalese shed some light on exactly what that will mean for those of us with stock option-based compensation?
======
chollida1
Well Kieth Rabois thinks it does

[https://twitter.com/rabois/status/926130750444814336?ref_src...](https://twitter.com/rabois/status/926130750444814336?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fd-23636655082619089073.ampproject.net%2F1508896929494%2Fframe.html)

So does CNBC

[https://www.cnbc.com/amp/2017/11/02/gop-tax-reform-bill-
help...](https://www.cnbc.com/amp/2017/11/02/gop-tax-reform-bill-
helpsemployee-stock-optoins.html)

Looks like you can defer the taxes from exercised options until there is
liquidity or 7 years pass.

~~~
seattle_spring
They're both referring to the removal of AMT. It sure seems to me like this
section overrides any benefits to startup employees with regard to AMT, and
then makes the situation a whole lot worse to boot.

~~~
chollida1
I don't think I follow what you're saying, or more directly I think you are
wrong.

Can you provide any evidence to back up your claim and show me where I'm
wrong?

~~~
seattle_spring
I'd love for you to explain why you think I'm wrong.

I linked to the tax bill itself, which says it will tax stock options upon
vest.

You linked to a tweet that just says, without any proof, that the tax bill
will remove taxes on stock options.

------
tlb
This refers to non-qualified stock options. Most tech employees have qualified
(incentive) stock options.

