Zuckerberg to Be Taxed at Lower Rate Than Most Facebook Employees

Thanks. That's very interesting. I guess it's the same as something that we call 'stock options'. You are granted a right to buy stock for the price it would be when one starts working, but you can't really sell them or cash them until the IPO. For example, if I started working for a company that would have stock price of $2.00 if IPO happened today, they would grant me the right to buy the stock at that price at IPO no matter what the stock price would be at the time. It's called 'exercising' your option. So, if stocks were worth $10.00 at IPO, I would have gained $8.00 on day 1.

However, even if you 'exercise' your stock options at IPO (buy stocks for the price of the valuation when they were granted to you), you don't have to cash in your stocks, which means that the gains would not be realized (and thus not taxable) until you do.

The tax, however, would be the same as any other capital gains, which is 25%. We do not care how long the gain took to realize, just the fact that the net gain was positive. (You can carry capital losses from the previous years and offset your positive capital gains when you have them.)