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Strategies & Market Trends : WR's Momentum Trades -- Ignore unavailable to you. Want to Upgrade?

To: Lola who wrote (9713)	3/17/2001 12:17:52 PM
From: Wayne Rumball	Read Replies (2) \| Respond to of 11130

Lola, any idea if there are similar tax regulations in Canada? It seems like a very strange regulation in the US. Tax people on money they might have earned....

To: Lola who wrote (9713)	3/17/2001 9:15:58 PM
From: ChrisJP	Read Replies (1) \| Respond to of 11130

Hi Wayne and Lola, I have a source at Microsoft who has been there since 1991. I e-mailed him with the question about employees having to pay a huge tax bill as a result exercising options. My guess is that as much as the Microsoft has fallen (50% - 60%), the stock has not fallen enough to cause the resulting tax bills to be greater than the underlying stock. Maybe my source will e-mail me an answer. If he does, I will post it. He mentioned that when he exercised his options this year, he immediately cashed in enough stock to equal the amount of the tax bill. It's sitting in a money fund and will be going to my favorite federal government in a few weeks. Ummmmmm ..... did I mention he's a really smart guy ? lol. He sold the rest when the stock fell below 80. He's still kicking himself for waiting so long to sell .... which isn't as easy as it sounds when you're carting a wheel barrow filled with money to a bank. <g> He has more options that are coming due this year .... I sort of hinted he may want to sell them sooner than later .... Regards, Chris

To: Lola who wrote (9713)	3/19/2001 8:44:32 AM
From: ChrisJP	Read Replies (2) \| Respond to of 11130

Hi Lola and Wayne, I got an e-mail back from my MSFT source ... He basically said that if people were getting nailed by exercising options and then having their stock tank, he hasn't heard about. Oh well, didn't hurt to ask. A high school buddy of mine just flew into town from Austin, Tx, for a convention. He provides actuarial advice for pension fund managers. I mentioned the options situation and he has heard it happening ... The CFO of DELL lives in his neighborhood. But he doesn't think its such a big deal. But then again, DELL employees have had several years to cash in, and like MSFT, the stock is 50% off its highs. The way he looks at it is many DELL employees have made a bundle; this year a few of them get to give some of it back. MSFT is probably the same way. I think maybe its the companies that came from nowhere in late 1998 through March 2000 where the exposure is the greatest. Use PMCS as an example: Up from 15ish in late 1998 to over 200 in 2000, now at 32. There was no time for anyone to build any wealth over time from their options. And you can see how easy it would be to exercise your options but not sell the stock. Hard to believe these stocks have collapsed so fast. We are now finally finding out how much of the tech boom operated on "funny money" (i.e. inflated stock and borrowed money instead of cash or tangible assets). Depending on how extensive the practice was, the implications are not good. Can't wait for CSCO's next quarterly report. Of course, they should never have 20-bagged in the first place. But we'll have to leave that witch hunt for another day. Ummmmm ...... is SI officially dead and no one bothered to tell me ? Chris