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Technology Stocks : Egghead.com EGGS (please, no putz's)
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To: Gustav G. Widmayer who wrote (20)9/8/1998 5:38:00 PM
From: Sjp  Read Replies (1) of 54
 
Gustav:

I'm wondering why somebody would exercise a stock option that was priced above the current market price? In other words, why not just buy it in the open market at the lower price?

I guess if it was a small cap stock and it allowed you the opportunity of possibly gaining a majority ownership, that would make sense.

Or possibly if it was a stock option exercised into your tax sheltered retirement account, that might make sense.

Nevertheless, to answer your question, according to my CPA, if you exercise stock options above the current fair market value and then later sell them for a gain, you'll simply pay taxes on the difference according to your federal tax rate. If you take a long term loss, you'll be looking at a deduction.
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