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To: GVTucker who wrote (173092)	2/17/2003 10:45:24 PM
From: Tushar Patel	Read Replies (1) \| Respond to of 186894

Yes, it would be more accurate to tax things at time of grant, but over the long haul, the actual value at time of exercise will end up equaling the value at time of grant. Can you explain why this is true?

To: GVTucker who wrote (173092)	2/18/2003 5:07:33 AM
From: rkral	Read Replies (1) \| Respond to of 186894

OT ... GVTucker, re "The employee pays tax on the imputed gain when exercised, and the corporation receives a tax break for that same imputed gain" Suppose an employee is granted non-qualified stock options with an exercise price of $10 and a fair value of $4 per SFAS 123, and later exercises when the market price is $17. What is the imputed gain? Would you be referring to the $3 (17-10-4) in this example. If so, I agree. But I don't understand why you consider it imputed. It is realized cash, at exercise. The $4 is (deferred) realization of compensation income, for which the company should get a tax deduction. The company should not get a tax deduction for the $3 gain, IMHO. I think it does, but I'm not sure. Would you please clarify your use of "imputed gain"? Ron