According to Denise Vitale, Vice President of Product Development, "This allows for better tracking of disqualifying dispositions
that require W2 reporting of the ordinary income and have an associated compensation expense tax deduction for the company.
As many option holders often exercise an option and sell the stock for cash the same day, disqualifying dispositions
are very common.
In addition, there will be no income tax withholding on such disqualifying dispositions
or on gains from exercising ESPP options with an exercise price between 85 percent and 100 percent of fair market value.
3% tax rate in its first quarter, slightly lower than expected primarily due to the impact of disqualifying dispositions
of incentive stock options exercised during the quarter.
Federal income tax withholding would not be required on disqualifying dispositions
or when compensation is recognized in connection with an employee stock purchase plan discount.
The IRS will scrutinize such compensation to ensure proper income recognition on vesting and on disqualifying dispositions
2 million relating to disqualifying dispositions
of incentive stock options.
421(b) for disqualifying dispositions
of incentive stock options (ISOs).
more than one-third, consider disqualifying dispositions
prior to the tax year-end.
The cash flow presentation for both 2005 and 2004 have been adjusted to move the Tax Benefit of disqualifying dispositions
of stock options and exercise of non- qualified stock options to the Financing Activities section of the cash flow statement from the Operating Activities in accordance with FAS 123R guidance.
71-52, but until it changed that ruling, it was extending payroll and withholding exemptions to ISOs and disqualifying dispositions
of statutory option stocks.
The provision for income taxes in this year's first quarter was reduced by $49 million related to ISO disqualifying dispositions