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

To: GVTucker who wrote (64086)	5/17/2003 11:44:53 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

GV: My understanding re. taxes for restricted stock (I'm not a tax guy, this is how it's been explained to me). The employee is deemed to have taxable income at the time the restrictions lift (shares "vest"). Ordinary income. Amount of income is equal to the difference between the amount they have to pay for the shares and the market price. IRS allows employees to make a special election to pay the tax at the time of the award rather than at time of vesting. Tax is owed on the difference between the amount paid for the award and the market price on the date of grant. No further taxes are due until disposition of the shares. Depending on various plans this can be an advantageous option to elect, although it can result in having considerable capital tied up either in taxes or in award premium. John

To: GVTucker who wrote (64086)	5/18/2003 12:27:29 AM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 77400

I was thinking that companies could essentially promise to give an employee stock based on some "deliverable" which conveniently has a due date in 4 years with milestones at the yearly mark or something. So no vesting per se but create an artificial vesting period. There is one significant problem with this- a lot of SV companies in the early 90s tried to cheat key engrs out of options, by hiring them with some outstanding options package and conveniently firing them a month before vest or something. This was so common a bunch of laws were enacted so that employees can almost always sue for unvested stock ... some key lawsuits happened and the fraud stopped. The problem with "promising" employees stock is it seems totally unbinding, thats a little troublesome.