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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: engineer who wrote (4555)	12/24/1999 3:47:00 PM
From: John Biddle	Read Replies (3) \| Respond to of 13582

My experience has been with non-qualified options. You are correct that with qualified options the gain is taxed at appropriate capital gains rates. I thought that most stock options to employees were non-quals though, and that's why I answered as I did. Also, WM's original answer seemed to make this same assumption, and I went along because I thought it was reasonable. As far as only paying a minimum amount at first, I agree here too that you get hit with the 28% withholding only. That is why I used the word accrue rather than pay. You have picked up the liability to pay the tax when you sell, though you don't have to pay it all at that time. I didn't know that you had to pay the withholding even if you wanted to convert to common. The tax law sucks in so many ways. Last but not least, I'm confused about your margin loan comment: If you have deep in the money options, you can usually take a margin loan out to buy them all and if it was QCOM stock, you can probably pay the difference off with the increase at the end of the year and also convert the difference between your fair market value at exercise and when you have to sell for taxes to capital gains rates. This sounds as if it concerns listed options rather than the one of a kind options a company would grant an employee. Usually they are not marketable and have all kinds of restrictions on them. At least, I thought they did. Am I wrong here?