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Comment by zamfi | Hacker News Reader

This is the same kind of logic that taxes private company stock gains on vesting even if the stock isn't sellable, if the "official" value at vest exceeds the grant value.

Whether you can sell something to cover the taxes just doesn't seem relevant to the IRS!

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This is what boggles my mind - what is the "value" of something if not the amount of money you can sell it for? If you can't sell something and it doesn't generate you any revenue then its value is zero.

They couldn't sell it currently, if the law changes in the future (or if it can be moved to another jurisdiction) then it could be sold for a non-zero value.

There is no way you could justify assigning value to something on the grounds that "if laws change then it has value."

You do, it's factoring the fact that something that cannot be sold legally can still has black market value, which is definitely the case for stolen art and antiques, protected species etc...

and stock!

So new parents should be deemed to have received whatever a baby’s worth on the black market?

True, but then you're taxing someone for a crime they haven't commited yet and might never commit.

I disagree. Markets react to election results.

Value is a very nebulous concept. But laws consistently affect the prices of everything from food to real estate to medical care to weapons to labour.

The changes aren't usually zero -> something, but that's a footnote to the general principle.

Prices are real. Value is imaginary until something changes hands.

So they can tax (the profits, price difference) when they sell it.

Couldn’t they charge for viewing? Or charge for loaning it? I still think the appraised value is nuts with that law in effect.

> This is the same kind of logic that taxes private company stock gains on vesting even if the stock isn't sellable, if the "official" value at vest exceeds the grant value.

I'm not a financial specialist, but googling[0] suggests that you can, say, use restricted stock as collateral for loans, at least under some circumstances, so the situation is slightly more subtle than having (currently) worthless pieces of paper that you have to pay tax on; not that I'm saying that the IRS is necessarily right.

[0] https://easystockloans.com/can-borrow-restricted-stock/

I keep hearing that, but why can't you sell it?

Surely brokering such sales (to accredited investors) is a profitable opportunity, so someone should be doing that. Charging a few % sounds like a reasonable fee for brokering rather illiquid securities. Not just in silicon valley which mints huge quantities of fresh private equity.

At least large VCs should see it as an opportunity to increase holdings at a discount as employees inevitably rotate in the company.

You can have a contract that says you are not allowed to sell it. It's called a "lock up".

That typically only applies to IPOs, no? I.e. the lock-up period is between the IPO and something like 6 months after public trading starts.

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