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|User Info||On This Tax Day....; entered at 2018-04-15 11:30:53|
The basic principle involved is fairly foundational to accrual accounting, in that theoretically the treasury shares of a public company have the value of whatever the stock price is on a given day. Accrual accounting is predicated on the idea that even though you haven't reduced something to cash (yet) when the economic act occurs the value transfer, creation or destruction occurs too.
The problem is that these shares or options only have that "value" if they're sold into the open market in fact, because otherwise they're worthless paper. They don't circulate, nobody can trade them, and their value tomorrow is a complete unknown. Unlike a building, cash or inventory they're intangible.
It's a scam put into the tax code and then you wind up with various refundable credits that, if you can do enough of this **** the taxpayers actually PAY YOU to operate the company and take the money out for yourself. It only works for large public companies in certain circumstances, but if you want to know where America went wrong... well, a big part of it is right there.