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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Meathead who wrote (9743)	11/28/1997 3:09:00 PM
From: Tom Aellis	Read Replies (3) \| Respond to of 97611

"Tom, what are the specifics behind turning employee stock options into common stock without paying income tax? " This first depends on the option your corporation is giving you. If it's filed as additional compensation, it can only be a cashless transaction, i.e. flip the option for profit above the strike price. Taxes are taken out righ away and listed as income on your W2 and paystub. However, most corporations,IMO, provide true options where you can excerise the call option at the strike price and purchase the stock at that price. Keeping the stock long term (I think 2 yrs, correct?) will allow you to benefit at the low 20 pct long term cap gain rate vs. your income tax rate 28 pct - 38 pct etc......Some people I know do a 50/50 and use the gains in cash to purchase the other 50 pct in stock at the strike price. Good Luck