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To: Gerald Drews who wrote (9727)	11/26/1997 10:24:00 PM
From: hpeace	Respond to of 97611

drew, and any cpa..please tell drew the dif between restricted and unrestrcited stk options<ggg> most people get restricted . especially after they go public... I've had employee options from 4 compnaies in the past as part of upper management... I don't think you have actually had any.<ggggg> please go to the options and tax thread and you will learn they know. i think I found your real agenda..you are pissed bec. I indicated that gateway would crash and it did. PS. i want be responding to your garbage back at me since the thread doesn't need junk.

To: Gerald Drews who wrote (9727)	11/26/1997 10:59:00 PM
From: Paul Huang	Read Replies (2) \| Respond to of 97611

Gerald - I guess you may be wrong. When employee stock options are exercised there will be gain show on your W-2 as other income if option price is lower than market price for same day sale. If exercised and kept the stock, you still need to pay tax as other income. However your tax basis for the stock you held is market price of the day you exercised.

To: Gerald Drews who wrote (9727)	11/26/1997 11:11:00 PM
From: hpeace	Respond to of 97611

I was going to post the tax code. but, you would just say I doctored it.. so, do net search on non-qualified options taxed when you exercise is what it will say. Lycos search will bring it up. i went an looked at my paperwork and 4 of the 6 stock options I got across 4 compnaies were this type and it's normal in the industry if you are already public when you get them. I enjoyed the no qualifed...but.you don't always get what you want. nceo.org by the way...i never said all options are like this... I had the other kind too.

To: Gerald Drews who wrote (9727)	11/26/1997 11:21:00 PM
From: Meathead	Read Replies (2) \| Respond to of 97611

Gerald - steve is most likely correct here. Are you referring to employee stock options or market put/call options? They aren't the same thing. I've been granted many options over the years and they all seem to work the same way. The difference between the grant and excercise price is treated as ordinary income. You must pay income tax and social security (up to the first 65k of your income) at the time of excercise whether or not you buy them outright or sell them and take the proceeds. You pay about one third in taxes no matter what. Using steve's numbers here's a simplified example: Strike: $25 Current: $100 Employees Income tax rate: 31% Cost to acquire shares = strike + (gain $75 * .31) $25 + Taxes of $23.25 = $48.25 Cashless transaction = Current - (strike + taxes) $100 - $48.25 = Net profit of $51.75 I don't know of anyway to avoid the initial income tax conversion problem. I think most company plans work the same... I don't know, maybe not. I'm sitting on a significant gain on one batch of options right now. It would be great if I could buy them outright, sidestep the high income tax rate somehow and convert them into assets to be sold at a later date taxed at the much lower cap gains rate. Is there some way to do this my company won't tell me about? If there is a way, I'd love to know... MEATHEAD