Dell Technologies Inc. Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc.

DELL 133.35

+0.1%

Nov 28 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Geoff Nunn who wrote (37203)	4/8/1998 10:37:00 PM
From: rudedog	Read Replies (1) of 176387

When an employee is granted an option, the fair market value is taxable as ordinary income. Geoff - You are not correct. There is no tax implication at all for non-convertible options until exercise, then the return is taxed as ordinary income. Non-convertible options can not be converted to stock, they are always exercised and sold in the same transaction by law. They are treated as a stock-indexed cash bonus for tax purposes by the IRS. The options have to be sold, and the cash used to buy more stock, to get the tax advantage. This is why someone holding non-convertible options would sell and then buy back. Convertible options are a different story, the holder must supply the strike price at exercise, but then the resulting sale is capital gains, just as if he had bought the shares at the strike price. There would be no incentive for early exercise in this case, just the opposite. Very few companies do convertible options any more because it requires a different type of reserve which ties up more capital, and many options are not exercised due to employees leaving before vesting etc.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next