The Justa and Lars Honors Bob Brinker Investment Club Thread Message Board

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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread

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Nov 3 4:00 PM EST

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To: Boca_PETE who wrote (2457)	4/29/2003 2:15:33 PM
From: Don Lloyd	Read Replies (2) of 10065

Pete, I never was a supporter of the corporate income tax deduction related to exercised employee stock options. It makes absolutely no sense to me. I see it as a gift from the politicians to corporations. It is an unneeded (in my opinion) incentive to issue employee stock options. I see little discussion of this issue. When employees pay taxes on cash income, failing to allow the company, and indirectly its shareholders, a tax deduction on compensation would be double taxation and a windfall for the government. Since option grants, although NOT an expense to the company, ARE a dilution expense to the shareholders, there is still a requirement for a tax deduction to prevent double taxation when the employees are taxed at exercise. As a purely pragmatic matter, this is a deduction allowed to the company, and indirectly to the shareholders, since it is not imaginable to directly give every shareholder a tax deduction every time any employee exercises an option. Regards, Don

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