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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (44889)	4/20/1998 10:13:00 AM
From: The Phoenix	Read Replies (1) \| Respond to of 61433

Chuzz, Sure.... One thing to remember - in general terms - you have to pay taxes. If you have ISO's (explained in last post), you WILL be subject to AMT...when you exersice your options...whether you sell at the time you exersice or not. AMT is the Federal Government's way of getting is share of any accrued value (exersice price less option price) in the stock right away. When you sell the stock you will be subject to tax at the appropriate bracket (below), but upon this sale you get an AMT tax CREDIT....for the AMT you paid in. Your income bracket if you sold in less than 12 months 28% if you sold in 12 - 18 months 20% if you held for 18 months or longer. So, to answer your question people that get stock options will typicallly exersice (ISO's) when the stock is trading low (that way they are subject to less AMT)....and sell high - but after they've held for 18 months....to diversify their portofolios....or perhaps to pay their AMT bill. Note that the same applies to NQ's except since you pay taxes (@28% rate) upon exersicing many people exersice and sell right away since there is little tax benefit to holding. However, with the new 20% cap gains rate this may change. Hope this helps.. OG (aka Gary not Korn)