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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Greg McDaniel who wrote (2410)3/16/1998 11:03:00 PM
From: I. N. Vester  Read Replies (1) of 27311
 
Lev Dawson exercised his options now for tax purposes.
At least that is my belief consistant with what i
know from my wife having been in the same position.

He gave the company a only promisory note. It is possible
to pre-exercise options i.e. to exercise even before
you are vested. If you do so, and the option price
equals the current market value then the 'bonus value'
is 0.

If you do not pre-exercise, then as soon as you do exercise,
you are liable for AMT on the bonus value even if you do
not immediately sell the stock.

Pre-exercising is a very smart thing to do. You have to
file something called a section 83b exclusion with the irs
to take the nill AMT hit immediately rather than taking
a very real hit when you become vested and actually
take ownership of the stock.
If the stock goes up the AMT hit is quite big,
forcing you to sell shares to pay the tax bill.
My wife's stock did not go up. I sure do hope Lev is
more fortunate in that regard!
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