SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 166.40-0.2%3:21 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Stock Farmer who wrote (119885)6/5/2002 4:10:24 AM
From: hueyone  Read Replies (1) of 152472
 
The companies get a Stock Option Compensation Tax Benefit equal to the ACTUAL stock option cost in a reporting period. Which is given by the difference between strike price and market price at exercise. It's not any more complicated than that.

John, In the post below you suggested that the tax benefit from stock option exercise is an after tax benefit and that the full stock option compensation cost could be figured by taking the tax benefit from stock option exercise and dividing by the marginal tax rate.

Message 17223089

Let's take Siebel. In the three years 2001, 2000 and 1999 Siebel's income statement shows a very respectable net earnings of 374,214 M$.

And deeper inside we see the cumulative employee stock option tax benefit over this period of 260,809 M$. Assuming a 35% effective tax rate, that's a not-visibly-recorded-anywhere benefit to employees of 745,168 M$, or within rounding error of twice what the company earned to the shareholders in this time.

This assertion appears contradictory to what you just asserted in the post I am responding too---as well as more "complicated". It is also a different view from my best guess in my recent post as to how companies are handling employee stock options with the IRS. Can you elaborate? Is Siebel writing off the 745 Mill on the tax returns (that we shareholders don't see) to produce the 261 million tax benefit? And how to do you reconcile this with your statement that the "Tax benefit is equal to the actual stock option cost in a reporting period"? Did you mean to say that the tax benefit is calculated from (rather than "equal to") the stock option expense---the difference between the strike price and the option at exercise?

Best, Huey
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News