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

To: GVTucker who wrote (67230)	3/7/2005 8:57:22 AM
From: Elroy	Read Replies (1) \| Respond to of 77400

They claim that stock options expense is a phantom expense, that it isn't correct because they can't accurately measure stock options expense. And yet they have been deducting that expense off their taxes for quite a long time. How do they calculate the amount to deduct from their taxes if they claim they can't accurately measure stock options for GAAP accounting? In other words, what's the formula for tax accounting?

To: GVTucker who wrote (67230)	3/7/2005 9:50:46 AM
From: Sr K	Respond to of 77400

The corporate expense from stock options has been at the time of exercise. The employee or option holder recognizes income of the difference between the selling price and the exercise price times the number sold, and the company gets a deduction of a similar amount.

To: GVTucker who wrote (67230)	3/7/2005 10:04:41 AM
From: Amy J	Read Replies (1) \| Respond to of 77400

GV, RE: "The stock option expense that year was huge, and it was deducted off their taxes, even though it didn't affect the earnings reported to the SEC." It eventually gets deducted from earnings when exercised, correct? If so, then what's the underlying issue - is your concern that it gets deducted on the back end (when exercised) rather than on the front end (when issued)? How would you address the issue around lumpy quarters as well as canceled options when handled on the front end? Regards, Amy J