Senate Scraps Provision That Would Tax Stock Options as They Vest

November 15, 2017

Media Coverage

The Senate has removed a provision from legislation taxing stock options as they vest, a big win for technology and other companies that rely on those incentives to pay employees.

The change was one of several made to the tax-cut bill by the Senate Finance Committee on Tuesday night.


Attorney Daniel Morgan of Blank Rome called the provision “a bit of tax roulette” in a phone interview with MarketWatch. “If a private company employee makes an election to defer the tax for five years, based on a value assigned today, the employee has hope that the company is still in business at that time and that there’s a way to sell the shares. Otherwise where will he get the money to pay the tax? Also, unlike an option to acquire stock in a public company, where the stock can be sold when the option is exercised, the employee is taking the risk that at the time the tax is due, the value of the stock may have decreased substantially.”

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"Senate Scraps Provision That Would Tax Stock Options as They Vest," by Francine McKenna was published in MarketWatch on November 15, 2017.