Bailout Bill Provided Tech Workers With Tax Relief for Stock Options

The recent $700 billion rescue package to bolster the financial system also threw a lifeline to thousands of people who owed taxes on stock options dating to the technology-stock crash of 2000. Some individual tax bills exceeded $1 million for shares that later plunged in value. A five-paragraph section tucked into the bailout bill effectively erased those taxes, at an estimated cost to the Treasury of $2.3 billion. Most of the people affected weren't top executives, but lower-level workers and middle managers at tech firms in the 1990s. Stock options give holders the right, but not the obligation, to purchase stock at a preset price, known as the strike price. For most stock options, holders must pay income tax on the difference between the strike price and the share price when the options are exercised, or converted to shares.