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Technology Stocks : Dell Technologies Inc.
DELL 126.42+2.8%Dec 19 9:30 AM EST
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To: GVTucker who wrote (158780)7/24/2000 4:23:22 PM
From: mepci  Read Replies (1) of 176387
 
GV: I probably can understand this if I use an example.
1. Dell buys the stock at $50 for treasury. This is not taxable. Money coming out of after tax cash (from shareholders equity).
2. Michael has an option to buy the stock at $1. He exercises it. $1 goes to shareholders. Michael gets the stock. No tax implications still.
3. Michael sells at $60 after 1 yr. He makes $59 profit, pays 28% taxes on it.

Stock holders got screwed.

4. The $50 to pay for stock came from, exercising the option Dell bought 2 years ago. Actual cost to Dell may be $11. Still no tax implication, because it came from shareholders pocket(cash from equity).

5. If the $11 came from profits from unexercised options that were sold (short puts), then there is tax implication, but all without any detail to shareholders.

This is big business, but shareholders are legally kept in the dark.

Please correct me whereever I am wrong.

Regards, mepci
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