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

To: Kirk © who wrote (64528)	9/14/2003 1:51:13 PM
From: hueyone	Read Replies (2) \| Respond to of 77400

Expensing options will lower the taxes for most companies Every tech company I know of already takes a deduction with the IRS for stock option expense, and the IRS already properly recognizes stock options as an expense. Companies are able to expense the difference between market price and exercise price at time of exercise. This is how the amount in the line item on the income statement named "tax benefit from exercise of stock options" is derived. The sound rationale behind Levin/McCain bill, s 1940, (that failed to pass last year), was that companies should not be able to claim stock options as an expense to the IRS and then turn around and tell investors with a straight face that they are not an expense, that companies should be consistent in what they are telling investors and the IRS regarding stock option expense. levin.senate.gov It's time to end the stock option double standard. The Levin-McCain bill would not legislate accounting standards for stock options or directly require companies to expense stock option pay, but it would require companies to treat stock options on their tax returns the exact same way they treat them on their financial statements. In other words, a company's stock option tax deduction would have to mirror the stock option expense shown on the company's books. If there is no stock option expense on the company books, there can be no expense on the company tax return. If a company declares a stock option expense on its books, then the company can deduct exactly the same amount on its tax return. The bill would require companies to tell Uncle Sam and their stockholders the same thing – whether employee stock options are an expense and, if so, how much of an expense against company earnings. Until I see the final proposal from FASB to expense stock options, I am not sure whether it will impact the manner in which the IRS recognizes stock option expense, but in one way or another, the IRS will continue to properly recognize stock options as an expense.