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To: Casaubon who wrote (65233)	12/25/2000 10:20:49 PM
From: Gersh Avery	Read Replies (1) \| Respond to of 99985

No 1099 is generated from options ..

To: Casaubon who wrote (65233)	12/25/2000 11:19:50 PM
From: KymarFye	Read Replies (2) \| Respond to of 99985

Another way to get killed on options-related taxes: latimes.com In short, it appears that, if you exercised the options to purchase stock, you may be subject to Alternative Minimum Tax (AMT) at 26 or 28% on the equivalent amount as assessed on the date of exercise, even though the shares purchased have long since lost much if not most if not all of the assessed value. The article left me unclear, however, as to the threshold above which AMT kicks in, and, more important for our purposes, how widespread the predicament described actually is.

To: Casaubon who wrote (65233)	12/25/2000 11:29:15 PM
From: James F. Hopkins	Respond to of 99985

The case they are talking about is when employees get dirt cheap options and exercise them, if they dump the stock they get hit with a 40% tax that's like seeing your baby drop 40%..on top of that in most cases they couldn't picture taht any thing but good was going to happen. If they held for long term gains the tax would only be 20%.. ---------- The trap was that the stock fell out of bed, if she sells the tax is less but still 40% , but if she thinks the stock will re-bound and buys it back before the 30 days are up..she is then stuck paying Taxes on the original paper gain as the sold stock can't be listed as a loss against her origanal paper gain on the options. --------- It's like seeing 400K melt to 36K and not be able to do a damm thing about it except sell. I know of a CFO last year in 99 before all this came up who got hit with a 500K loss via getting options cheap and them watching helplessly as his stock melted down to where the Tax was more than the stock was worth. He should have paid the 40% tax and that's easy to say in hind sight, but would you sell me a stock 40% off that you really thought was going to go on up ? There is also peer pressure against dumping stock as soon as you exercise the options as they don't want to spook investors with a lot of "insider selling" --------- It's one thing for insiders to see their options become worthless it's another to exercise then latter have to pay a big Tax on what after the fact wound up worth less than the tax. ----------- So the next time you see insiders dumping at low prices and wonder why..taht could be one of the reasons, Jim