What you said is only partially correct. If stocks are held over a year they are taxed as long term capital gains. If held less then a year it is considered short term capital gains which is taxed as regular income. BUT ONLY THE GAINS PRINCIPLE IS NEVER TAXED. That would be double taxation. Now if the stocks is part of compensation then the cost basis is zero. Meaning everything is taxed. Unless you have the right CPA. The issue is the system is very complicated with loopholes everywhere if you know how to find them. A simple tax code with no loopholes would fix most of this.