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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs
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To: Mick Mørmøny who wrote (750)8/8/2005 5:50:29 PM
From: R2ORead Replies (2) of 786
 
I would think that stock option expense, being a 'real expense', should be deductible as an expense, reducing taxable income.

If it is not deductible (AFAIK, it is not), and it is a real expense (as the horse that escaped the barn accepts), why not?

I'm wondering if y'all believe that a public stock offering (at the market) is dilutive. Would any distribution of shares, regardless of what's received in return (e.g. acquisition of another company), be dilutive? How about at an above market price?

(Since option grants are completely equivalent (same start and end points) to a market stock offering plus cost of money until exercise it makes no sense to believe options are any more dilutive than a stock offering. The only argument is over the loss of stock price appreciation.)

If one believes that an option bears the expense of forgone expectation of appreciation of stock value, then would one also deduct an expense for stock sold at the current market? Same theory: future price appreciation is forgone. If the value of that expense is to be calculated in the same way that option expense is calculated, what 'time to exercise' would be used?

I, for one (as a stockholder), would prefer to have my employees pay the company as part of their work.

Of course, if one happens to have options granted prior to public offering ...
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