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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 166.81-4.1%Nov 17 3:59 PM EST
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To: rkral who wrote (119862)6/4/2002 2:35:52 PM
From: hueyone  Read Replies (3) of 152472
 
The issue in the 1994 vote, and Mr. Buffett's article, is the option expense related to the option grant event. It has nothing to do with any possible expense upon option exercise, e.g., the Shannon proposal.

Hi Ron or any accountants:

Thanks for clarifying that. I would also like to hear your explanation of how most companies are handling stock options on their tax returns. I wish the discussion provided by Levin's website had run through an example from beginning to end, but it did not. I am under the impression that the "Tax Benefit from Exercise of Stock Options", that we often see in companies' operating cash flow statements on the 10Qs, is a different item from the compensation expense related to the option grant event. I believe companies currently are not only getting the Tax Benefit from Exercise of Stock Options, but are also writing off the compensation expense related to stock option grants (but not reporting this same expense on the income statement to shareholders). If this is correct, are companies already using some fair value method (Black Scholes?) to calculate this option grant expense on their tax returns to the IRS? Of course the reason I want to make sure I understand the accounting for options to the IRS correctly is because the Levin/McCain bill would require consistency between what companies are reporting to the IRS and what companies are reporting to shareholders.

Your comments on this matter would be appreciated.

Best, Huey
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