In some cases, the tax bills will be bigger than the stock holdings. The answer for many is to dump that stock by Friday. Doing so means they'll owe income tax at marginal rates as high as 39.6 percent. But at least the tax will be based on their actual profits, not the evaporated paper profits. Here's where the bomb can explode.
Some folks still feel strongly that their company's stock is undervalued and worth buying back.
So, they quickly buy back shares or exercise new options. For years, no one questioned it, partly because they didn't need to. It indicates that buying back stock within 30 days triggers the tax trap. The details are too complex to delve into here. Suffice it to say that the logic of the new interpretation is convoluted, circular and unbelievable.