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To: tcmay who wrote (173090)2/17/2003 1:56:27 PM
From: GVTucker  Read Replies (2) of 186894
 
tcmay, RE: What FASB does is not even the most important issue. The IRS should begin taxing options as items of value, at the time of grant. This will cause the necessary accounting changes to happen immediately.

FASB is indeed not the most important issue. It isn't nearly as important as most people think, on both sides of the debate.

On the IRS side of the coin, options already are taxed as items of value, albeit at time of exercise, not time of grant. The employee pays tax on the imputed gain when exercised, and the corporation receives a tax break for that same imputed gain, essentially writing that off as a compensation expense.

Yes, it would be more accurate to tax things at time of grant, but over the long haul, the actual value at time of exercise will end up equaling the value at time of grant. And it makes more sense not to tax people on something unless they've realized the gain in a currency that they can pay the tax with.
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