Wednesday, December 13, 2006

US to give tax relief for 'phantom' gains

US President George W. Bush is expected to sign into law by next week a bill that will give relief to employees who were taxed on "phantom" share options gains they never received. The enactment of the legislation will allow refunds to be claimed from January by employees at companies such as Cisco and Intel that paid tax on the paper value of share options that later lost much of their value. The legislation will give relief to many of the employees hit hardest when the technology bubble burst. The bill reforms a tax on incentive on stock options that was designed to encourage long-term share ownership by employees, but exposed them to huge financial risk by taxing the theoretical gains they made when the stock was purchased, not when it was sold.

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