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To: Oeconomicus who wrote (160092)	9/1/2004 11:02:33 PM
From: hueyone	Read Replies (1) \| Respond to of 164684

<<If it's taxable to the employee, it's deductible for the employer. Would you have it otherwise?>> No, I think compensation from the company to the employee should be taxable to the employee and a tax deduction to the company---just like salary compensation. I also think this employee stock option compensation should be duly reported as an expense on the company's income statement, either estimated at time of grant per the FASB proposal and amortized over a period of years, or taking an expense at time of exercise in line with the IRS deduction. Either one is far better than zero expense charade that companies are using now. <<BTW, tax treatment has never been part of this debate.>> Apparently you missed an entire, important episode of this debate then. Senators Levin and McCain sponsored bill S. 1940 about three years ago with the central argument being that companies shouldn't be able to tell Uncle Sam one thing, that is that stock option compensation was a tax deductible expense, while telling investors another thing--- that stock option compensation was not an expense to be included on the income statements. The bill would have required companies to report an expense to investors on the income statements if they were taking a tax deduction with Uncle Sam, or conversely, if they were not reporting a stock option expense on the income statement to investors, they could could not take a tax deduction with Uncle Sam. The bill was called "Ending the Double Standards for Stock Options Act". The bill didn't pass. I had an entire folder of links to the bill itself along with Levin and McCain's arguments, but the government changed the address links to senators and government officials and now the old links don't work. I posted about this bill on a number of threads back then, and I expect if you did a search for McCain and Levin on the Intel, Cisco, and Employee Stock Options threads you would find a number of posts about it. We may have even discussed it on here at one time. We did: Message 17142829 Here is an old marketwatch story about it: marketwatch.com For a number of reasons I wouldn't support that bill over the current FASB proposal, but I do think there was merit to the Senators' arguments regarding inconsistent treatment of stock option compensation---an expense on the financial statements going to the IRS reports but not an expense on the financial statements going to shareholders. By the way, I kind of miss the old wide ranging debates on all manner of subjects that used to occur over here.<g> Regards, Huey