|
|
|
Don't corporations get a tax deduction on their stock options?
There are legal restrictions on how "tax-qualified" stock options can be structured. The employer cannot deduct the value of these options as compensation expense when the options are granted or exercised; the employee does not recognize taxable compensation income (although the spread between the option price and fair market value constitutes an "item of adjustment" for alternative minimum tax purposes). Depending on when the employee sells the option stock, the employer may then deduct a certain amount as compensation expense. If the employee holds the option stock for the required term, the employer will never get a tax deduction.
|
|
