- Dec 17, 2017
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Options or grants?He has performance based options tied to the stock price benchmarks. Doesn't Bezos get taxed when he sells stocks that he is holding as capital gains?
Options have fallen out of favor, because they can go "underwater" - if you're granted the options at $100 and the stock price drops to $80, your option to buy isn't worth anything. Grants are yours; you're given (say) 300 shares, vesting 100 each year for 3 years. After each year you get 100 shares, and are taxed on the value of the shares that vested.
When you sell, you're taxed on capital gains. In the US, if you sell after holding the stock for less than a year, you have what is called "short term capital gains", and are taxed at your tax rate. If you sell after holding for more than a year, you have what is called "long term capital gains" and are taxed at 15% or 20% of the difference between the sale and purchase price (20% if you make > $450k/yr or so).