Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (173107)	2/18/2003 8:52:54 AM
From: GVTucker	Respond to of 186894

rkral, RE: 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"? Sorry, I misused the term. Imputed should apply to a theoretical gain. In this case, what I meant is that the difference between the exercise price and the market price of the stock at the time of exercise is what the tax code considers the gain to the employee and the expense to the company.