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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (8947)11/14/1999 11:33:00 AM
From: Madharry  Read Replies (2) of 78618
 
It may well be that we have fallen out of a tenth story window and are passing the second floor now, but the charts on many of my mostly tech holdings look really good so I believe the present rally will continue for awhile.
OT: I read something which if true I was totally unaware of:
Someone stated that although the difference between the exercise price of an option and the market price at the time of purchase is not charged to income for accounting purposes, for tax purposes the company can record that difference as an expense and deduct it from its taxes, thus the company increases its cash flow from having options exercised by significantly more than the option price. For example Smith has options for 5000 shares at $1. Market price is $10. Company can deduct as an expense 5000X(10-1) or $45,0000 when Smith exrcises his option and buys the stock.Can someone confirm this?
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