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In the next month or two, the recapitalization of the company I work for will settle in a drag along sale, which will mean that all of the minor shareholders will be forced to sell their holdings. As the company gives some options to all new starters, everyone is going to get something, with the value per option depending on the strike price to exercise it. The exercise price is established at the point of issue, so the older the option, the less the exercise cost. Plus, shares have also been distributed over time, and there has been a few rounds in the past to buy some shares directly. What this means though, is that before Christmas, everyone in the company will get something, with some getting *significantly more something, than the something of others.

![image.png](https://files.peakd.com/file/peakd-hive/tarazkp/23uEoYYkHnYStptqKjt7pvqKSMtn6m4tLVFRrgrWFBbjd1tgtpFkxVNUdxx5DCtHUhyUu.png)

However, this sets up a little bit of a conundrum for many, because it is going to be a tax event and for quite a few, it is going to be a very significant tax event. Even for me who won't be getting much, it is going to push me over my threshold for the year, which will mean that I will be paying a high percentage on the amount. However, for someone like a few of my friends who have been working in the company for well over a decade, this event is going to be enormous. Like my friend said,

> I don't trust myself.

What we were discussing are the tax implications, and to keep it simple, whether to pay all of the tax for the future now, or take the maximum payout now, and then have a delayed tax obligation for next year. My friend will pay it all now and he even joked,

>This way, I won't have the temptation to gamble it all on Bitcoin.

*That was a dig at me, obviously.*

I get his fear though, because for him the difference might be very large and if he is actually bad with his finances and he overspends, he could be left with a significant tax debt come next year. This would mean that any of the initial good feeling now, would turn into quite a bitter experience. However, paying the tax now would taste bad considering the amount, but there would be that peace of mind that from there on out, it is all his in his pocket. If he loses it all, he won't be in debt.

Of course, *paying pretax is for noobs.* Well, that is how a lot of people think, because paying it upfront might bring some peace of mind, but it also delivers an opportunity cost of what else could have been done with that money. An investor might be confident enough that whatever they do with the money, they will generate more with it in their hands, so that the future tax burden will be covered. If this was last year and my friend did gamble it all on Bitcoin.


![image.png](https://files.peakd.com/file/peakd-hive/tarazkp/243zxwJckgk1ouoUBX4ZPYBTDmZZir5ivMK2A6FYpHcbcPMPBQSzang1Umb6VcgxCuv6o.png)

He would have a *much larger* tax bill - and would be well and truly up still. 

But essentially, we are all risk averse and *probably should be* when it comes to how we spend our income. Yet, risk aversion when it comes to investing is quite interesting, because while there are people who aren't willing to put 100 dollars into an investment portfolio every month, that same person might be spending 200 dollars on beer and cigarettes. They fear uncertainty, so seek the certainty of a *guaranteed loss* instead. It is rarely seen as a loss though, because the money was used on something physical that could be held, or experienced, which tricks the mind into believing there is value in it. 

At the end of the day, the tax amount is going to be the same, so I don't think that I am going to change my tax card percentage, and instead just let it be. It will get me only slightly more in hand, but I intend to use it all to cover the debt I have already run up in the garden ground work. It made more sense to get it done this year (due to a tax rebate available) than wait. So, I added the debt knowing that I can pay it off within a couple months anyway. Anything else left over, will go to paying off other debts, or paying down the mortgage. 

> I will play it safe too.

I wish I didn't have to at this time and I could instead just enjoy it, invest it, play a little. But, too many things are up the air and if I can add a bit of cushion right now, I will go that way. There are times to play the edge, there are times to take a step back. It is going to be interesting over the next few months though, as tens of millions worth will be injected into people's pockets, with quite a few old timers getting a large windfall. 

>How much of it is going to be seen in their behavior?
 
How many will be in tax debt next year?

Taraz
[ Gen1: Hive ]


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