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To: Oeconomicus who wrote (160095)	9/2/2004 2:20:51 AM
From: hueyone	Respond to of 164684

Bob, I am not here to argue the bill with you; I am here to point out the inaccuracy of your quote saying "Tax treatment of stock options was never part of the debate". It was clearly part of the debate with regard to S. 1940. The other issues you raise are interesting and well argued, but do nothing to dispel the inaccuracy of your statement that tax treatment was never part of the debate. Obviously I understand there can be a difference between tax treatment and GAAP accounting treatment of various items, or I wouldn't have responded to GST's post by asking whether he meant to be referring to accounting treatment rather than tax treatment when GST said "I hope stock options receive the tax treatment that they so richly deserve". Nonetheless, the fact that Gaap income and taxable income often differ due to differing treatment on a number of items, doesn't dispel the irony in companies' contradictory claims with respect to whether stock options are an expense or not depending on whether the companies are reporting to the IRS or reporting to investors. However, I would agree with you that this irony isn't reason enough by itself to expense stock options. Now if you have said tax treatment was never part of the debate at FASB regarding whether to recommend or not to recommend expensing stock options, I think you would be right. I doubt the FASB references IRS policy, because it is the FASB's job to determine fair, consistent standards for financial accounting and reporting; it isn't their job to mimic the findings of another government agency or to try to match GAAP earnings with IRS taxable income. With regard to the FASB making the recent recommendation to expense stock options on the income statements (and the same recommendation back in 1993/4 as well), the FASB had plenty of great logic and reasons to do so irrespective of the fact that companies take a tax deduction with Uncle Sam when stock options are exercised. JMO, Huey