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

To: jbn3 who wrote (24349)	4/12/1999 5:10:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 77397

Good afternoon Bachman, yes, AMT is the reason (according to my accountant at least), but such things are beyond my ken-- tax regulations make me twitchy . Regardless of the reason (federal or corporate), I am sure that the existing environment is one in which it is hard to justify stock options as efficient uses of shareholder capital. Perhaps I am overly cynical, but this is an issue where I think one could make a clear-cut case of management trying to fool shareholders. TTFN, CTC

To: jbn3 who wrote (24349)	4/12/1999 7:36:00 PM
From: Jay Couch	Read Replies (3) \| Respond to of 77397

Guys, The reason that someone would want to immediately exercise and sell stock options (ISO's or NQSO's) is because they can't afford to exercise them (pay the option price) and hold on to them for a year (to only have to pay long term capital gains). AMT is a tax you must pay, regardless of if you sell the options, or not. So, if you were to exercise options that you had CSCO options, for say, $10/share, you'd have to pay AMT on the difference between your option price $10, and the Fair Market Value, $118. I forget what the percentage is, but, if you add that cost into the cost of the options, it just makes sense to do Same-Day Sales on them. At least that's my understanding of it. Jay