What is the impact of the proposed taxation of unrealized capital gains for startups and investors?

There are a lot of things going on right now. Ever since I started working in the tax industry, I think starting in 2012, there have always been rumors that Congress wants to tax unrealized gains.

For those of you who don't know about unrealized gains, let's just say I bought Microsoft stock at $1, it's worth $101 right now, and I haven't sold it. It's unrealized. I will get taxed on that $100 gain if I sell it. Congress is proposing doing a mark-to-market, which means every single year, regardless of if you sell it, you're going to pay tax on the $100.

At the current moment, it's more of a “Hey, we're just proposing it. People want it done.” But it's very unlikely to happen, from my personal standpoint. It creates a lot of major issues, mainly task flow related. If I haven't sold the stock, I haven't had any money from the stock. You're going to pretty much force people to do a crazy sell-off every year at certain points in time. It is something that may happen; I know a lot of people have talked about it. New York specifically has talked about doing this at a state tax level in order to go after the hedge funds and private equity firms there.

But there are a lot of complications around this. For now, I wouldn't worry too much about it. People have been talking about it for over 10 years at this point.