Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 170.90

-1.3%

Nov 7 3:59 PM EST

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To: sal99 who wrote (121756)	7/18/2002 5:05:00 PM
From: Art Bechhoefer	Read Replies (3) of 152472

>> employees are subject to regular earned income tax rates for the difference between the option cost and the market price at exercise<< sal, this seems a little confusing. The employee is granted an option for, say 100 shares at a price of 25. The stock is at 30 (these are all prices for illustration only). The employee is in no hurry to exercise the options, since the stock price is hardly any different from the option price. A year passes, and now the stock price is 50, but the employee still has the right to purchase at 25. When that purchase goes through, the company should report the $25/share difference between the option price and stock price as an expense. A year later, the employee decides to take a profit in the shares, making $25 (or possibly more) for each share. The profit on the sale rightly should be reported as capital gain. If the time between purchase and sale of the stock that was obtained through the exercise of options is greater than a year, then the capital gain should be subject to a preferential rate. Art

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