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To: jim_p who wrote (82476)	12/22/2000 2:06:13 PM
From: Ken Robbins	Respond to of 95453

NG price story from Reuters: biz.yahoo.com

To: jim_p who wrote (82476)	12/22/2000 3:06:29 PM
From: upanddown	Respond to of 95453

Jim re options and taxes The LA Times has a column on this subject today and they say the opposite. The working stiffs get non-qualified and the execs get incentive (which makes sense when you think about it). For the exercisers who don't sell, the little guy (typically working for a low salary because of those "valuable" options) could get hurt worse than the big guys. In the main column, they not only say that many employees are not aware of the tax consequences.....some of the issuing companies are not aware of the tax consequences!!! Copyright 2000 Los Angeles Times Your Tax Bill Will Depend on Type of Options There are two basic types of options: non-qualified stock options, typically issued to workers, and incentive stock options, which are usually offered to executives. Non-qualified options are taxed sooner and at higher rates than incentive options, but incentive options can trigger the dreaded alternative minimum tax. With non-qualified options, you owe regular income tax on the difference between the price you paid for the stock and its fair market value as soon as you purchase the shares, even if you don't sell the stock right away. With incentive options, no regular income tax is due when you purchase the shares and the gain can be taxed at favorable capital gains rates if you hold the shares at least a year after purchase (and two years from the day the options were granted. However, you may owe alternative minimum tax in the year you purchase your shares, particularly if you scored a large paper profit. The AMT is a parallel tax system that has two tax rates, 26% and 28%, and allows far fewer deductions than the regular income tax system.