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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (52)	6/15/2002 2:32:48 PM
From: hueyone	Respond to of 786

you have missed the point (somewhere in the few posts of this thread) that employee compensation expense due to option exercise is not a real expense. You have missed the point that the only people that agree with you and Clark are A. Beneficiaries of stock option compensation and B. Congressman who have been bribed by Silicon Valley executives to go along with the scam. The author in the Wall Street Journal article below gave a pretty objective look at the situation ---including arguments from both sides, and once again, like the Financial Accounting Standards Board, concluded that stock option compensation is an expense that should be deducted from net income before tax. Huey

To: rkral who wrote (52)	6/16/2002 10:50:03 PM
From: hueyone	Respond to of 786

Ron: These quotes from Levin indicate that companies are treating stock option compensation as an expense on their tax returns to the IRS: levin.senate.gov The bill would require companies to treat stock options on their tax returns the same way they treat them on their financial statements. If a company wants to deduct stock options from its income for tax purposes, then it must do so on its financial statement. If there is no stock option expense on the company books, there can be no expense on the company tax return. Clearly the above statement in bold suggests that companies are deducting stock option from their income for tax purposes. If companies are not taking an expense on their tax returns now, why would Levin even be mentioning it in his testimony? Levin goes on to say: Companies can grant options and take them as a tax deduction if they show them as an expense on their books; but, if they choose not to treat stock options as an expense, then they couldn't turn around and tell Uncle Sam the opposite. That's common sense. And it would put a much needed end to the stock option double standard. Ron, the double standard Levin/McCain is referring to is deducting stock option compensation from income for tax purposes, but not deducting it on the reports to shareholders. Otherwise, why is Levin concerned specifically about companies not taking an expense on reports to shareholders but then "turning around and telling Uncle Sam the opposite"? Why would Levin be worried about this double standard of expense reporting, meaning different reporting shareholders and the IRS, if it didn't even exist? How this compensation is being valued and deducted, leading to the tax benefit, is a separate question. Best, Huey