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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (63229)	6/25/1999 12:39:00 PM
From: Joan Osland Graffius	Respond to of 132070

Wayne, >>I would guess there must be a taxable event -exercise of stock option by employee- What a scam! Yes, there is a taxable event. The company takes out the maximum tax rate and sends it to the fed when paying out stock options. We end up overpaying the fed every year because of this practice. Washington is solving there cash flow problems. <ggg> Joan

To: Mike M2 who wrote (63229)	6/25/1999 2:08:00 PM
From: Freedom Fighter	Respond to of 132070

Mike, I also suspect that there much be a taxable event. It's how they calculate the tax benefit that I'm curious about. Each of the options has a theoretical value at grant time that the company keeps track of. But when it vests and gets cashed in the ultimate value may be different than its originally calculated intrinsic Black Scholes value. Because of the bull market a ton of options are worth a lot more than originally expected. I suspect the ultimate value is what they use, but I am not sure. The tax benefit appears to be another huge quality of earnings issue if the ultimate value is being used and applied to the income statement. It's not just the non-expensed options that are a problem right now. Wayne