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Technology Stocks : The New Qualcomm - a S&P500 company
QCOM 173.60+0.1%3:59 PM EST
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To: w molloy who wrote (4540)12/24/1999 12:31:00 PM
From: John Biddle  Read Replies (1) of 13582
 
BTW When your options do vest, be prepared for a shock. You will pay income tax (not capital gains) on the difference between the exercise price and the fair market value for he shares. And you will be in the max tax bracket too.

Two Minor points: the gains involved are the difference between market price (which is the exercise price) and the strike price (the original price). Second, taxes accrue when you exercise, not when you vest.

You are right about the income tax rate being the appropriate one rather than capital gains rate. I'm not positive, but I believe that if you were to pony up the cash to cover the strike price amount, you could take possession of the stock and not have a realized gain yet. Of course, when you sold you would have to pay taxes on the difference between the then current market value and your basis cost, which was the original strike price. The holding period for capital gains starts when you convert to stock, not when you got the options.

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