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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (34631)	5/5/2000 2:33:00 PM
From: lawdog	Read Replies (1) \| Respond to of 77400

Gary, if a nonqualified option does not have a readily ascertainable fair market value (these don't), the grating of the option to a CSCO employee is not a taxable event. The purchase of the stock that the option represents is the taxable event. The employee recognizes ordinary income in the amount of the FMV of the stock minus any amount paid for the options (prob. nothing unless you work for ATT and like tracking stock IPOs). Capital gain or loss is recognized when the employee sells the stock. The employer is allowed to deduct the same amount the employee includes in gross income in the year the option grant becomes taxable to the employee.