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

To: rkral who wrote (59759)	6/9/2002 9:12:03 PM
From: hueyone	Read Replies (2) \| Respond to of 77400

As for "pre-tax option expense", we don't (well I don't) know if the "fair market value" per SFAS 123 is treated as an expense on the corporate 'tax books' or not. Do you? John S., do you? When I asked a similar question on the Q thread, several posters, including JS, said that with regard to stock option compensation, the corporations simply recognize the difference between strike price and market price at time of exercise. So I started operating on that assumption, but to my knowledge, none of us discussing this subject have ever seen any of these corporations' tax returns. I have been working on this very same problem on the SEBL thread and I am meeting with limited success. I tried to work backwards to reconcile the tax benefit from exercise of stock options with exercises of stock options that I knew about from various SEBL officers, but the figures did not reconcile. Dividing the tax benefit by SEBL's 37% tax rate gave me a figure that was way too low. Message 17578700 For what it's worth, I just now noted that the pertinent line item in cash flow statement on the SEBL 10k says "tax benefit from exercise of stock options", whereas the corresponding line item in the Cisco 10K simply says "tax benefits from employee stock options plans". Nothing about "exercise" in this line. However, if this line was related to the Black Scholes calculations I would think it would match the 1.69 Billion after tax figure we settled on earlier as the difference between pro forma Black Scholes afer tax net income and regular "as reported" after tax net income. Since the effective tax rate for FY01 was 37% How did you come up with the 37% tax rate? Net income before taxes was negative 874 million, taxes were 140 million and after tax income was negative 1.104 billion. I am not sure how to extract the tax rate in this situation where we have negative net income before taxes. If my personal corporation's net income before taxes is negative, my corporation's marginal tax rate is zero. Best, Huey