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To: rkral who wrote (119117)	5/22/2002 10:58:53 AM
From: Stu R	Read Replies (2) \| Respond to of 152472

Ron, Since the taxes paid by the employee didn't end up in Uncles Sam's pocket .. we can conclude that we really don't have single taxation with the tax credit. Therefore , the original premise, "to avoid double taxation" without the tax credit, is false. I think you are not considering that the company effectively pays a corporate income tax by virtue of not being allowed a deduction for compensation expense on the options. If the company did not receive the credit the company would pay a higher income tax as a result of not deducting the compensation and the employee would pay tax on option exercise and therefore without the credit a double tax would occur. To straighten it out the company becomes whole with the credit and the employee pays the tax as it is with regular compensation. Hope this makes sense. Stu

To: rkral who wrote (119117)	5/22/2002 12:32:21 PM
From: hueyone	Respond to of 152472

Ron, for your further information, here is a link someone just provided me to the Levin/McCain bill titled "Ending the Double Standards for Stock Options Act". (Click on text of legislation.) thomas.loc.gov. The above link was working earlier this morning and I expect it will start working again. S.1940 : A bill to amend the Internal Revenue Code of 1986 to provide that corporate tax benefits from stock option compensation expenses are allowed only to the extent such expenses are included in a corporation's financial statements. Sponsor: Sen Levin, Carl- Latest Major Action: 2/13/2002 Referred to Senate committee. Latest Status: Read twice and referred to the Committee on Finance. Committees: Senate Finance Best, Huey