INTCW Message Board - Msg: 625733

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Technology Stocks : INTCW

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To: kenneth mcmahon who wrote (13)	1/7/1997 3:13:00 PM
From: kolo55	of 78

Exercising the warrants defers the capital gains tax. I am not a tax expert, but my tax books say that you add the cost of the warrants (at the price you purchased) to the Exercise price paid ($41.75) to get your Intel stock tax basis. Then when you sell the stock, you report the capital gain. These are not "non-qualifying stock options", if you purchased them on an open market. As an Intel employee, you may have received incentive stock options as part of your compensation package. If these options are nonqualified and has no ascertainable fair market value, then you could be liable for ordinary wage income taxation when you do exercise the option into a marketable security. Essentially, the IRS is trying to capture income tax on the "income" you receive by getting securites from your company at below market value prices. They can't prove you got the options at below market value until you exercise. This is really complicated, and I am not an expert in this matter. But I do know for a third party investor buying in a public market, the investor simply adds the cost of the options to the exercise costs to get cost basis as I outlined in the first paragraph above. Sorry to delay posting this; I hope you get it. Paul

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