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The Stock Options Book
Thirteenth Edition
by Alisa Baker and Pam Chernoff
$35.00 for NCEO members; $50.00 for nonmembers
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As the use of stock options has increased, so has the degree of legal, accounting, and regulatory complexity associated with employee option plans. This revised and expanded edition by equity compensation expert Alisa J. Baker presents a straightforward, comprehensive overview of both the big-picture issues and the technical details related to designing and implementing stock option plans. In addition to examining the rules, the book looks at "hot" issues and provides illustrative exhibits, a glossary, a bibliography, and primary source materials, plus a seminal article by Corey Rosen on stock plan design. The 13th edition has been fully updated throughout as of late 2011 and covers the latest developments in equity compensation, including the Dodd-Frank Act and Section 6039 reporting.
"This book should be on the desk of every stock option professional. Alisa Baker provides the reader with a wealth of technical information and practical advice in a clear and easily accessible format. As an added bonus, she is not afraid to voice her own opinions on controversial issues."
- Robert H. (Buff) Miller, Cooley Godward Kronish LLP
"Anyone involved with the design or administration of employee stock option programs, from the inexperienced stock plan administrator to the seasoned compensation professional, will appreciate this useful reference tool."
- Tim Sparks, President, Compensia, Inc.
"This book should be on the desk of every stock option professional. Alisa Baker provides the reader with a wealth of technical information and practical advice in a clear and easily accessible format. As an added bonus, she is not afraid to voice her own opinions on controversial issues."
- Robert H. (Buff) Miller, Cooley Godward Kronish LLP
"Anyone involved with the design or administration of employee stock option programs, from the inexperienced stock plan administrator to the seasoned compensation professional, will appreciate this useful reference tool."
- Tim Sparks, President, Compensia, Inc.
Publication Details
Format: Perfect-bound book, 442 pages
Edition: Thirteenth edition (February 2012)
Status: In stock
Contents
PDF of the book's comprehensive table of contents
PrefaceIntroduction
Part I: Overview of Stock Options and Related Plans
Chapter 1: The Basics of Stock Options
Chapter 2: Tax Treatment of Nonstatutory Stock Options
Chapter 3: Tax Treatment of Incentive Stock Options
Chapter 4: Plan Design Considerations
Chapter 5: Employee Stock Purchase Plans
Chapter 6: Trends in Equity Compensation: An Overview
Part II: Technical Issues
Chapter 7: Financing the Purchase of Stock Options
Chapter 8: Overview of Securities Law Issues
Chapter 9: Tax Law Compliance Issues
Chapter 10: Basic Accounting Issues
Chapter 11: Tax Treatment of Options on Death and Divorce
Chapter 12: Post-Termination Option Issues
Part III: Current Issues
Chapter 13: Legislative and Regulatory Initiatives Related to Stock Options: History and Status
Chapter 14: Option Backdating: History and 2010 Update
Chapter 15: Cases Affecting Equity Compensation: 2003 Through 2011
Chapter 16: Transferable Options
Chapter 17: Reloads, Evergreens, Repricings, and Exchanges
Appendix 1: Designing a Broad-Based Stock Option Plan
Appendix 2: Primary Sources
Glossary
Bibliography
Index
Excerpts
From Chapter 3, "Tax Treatment of Incentive Stock Options" (footnotes omitted)
The spread on exercise of an ISO is subject to alternative minimum tax (AMT) in the year of exercise unless the stock is sold in the same calendar year. Although the specific application of the AMT is too complex to summarize here, generally AMT is exactly what its name suggests: an alternative to the regular tax system. AMT is imposed on alternative minimum taxable income (AMTI) as computed under Sections 56 through 58 of the Code. To arrive at AMTI, the taxpayer computes regular taxable income (as defined in Section 55(c) of the Code) and then adjusts that amount by any adjustments or "tax preference items" (i.e., items that reflect certain deductions and tax deferral benefits allowed under the regular tax system) taken in the taxable year. The spread on exercise of an ISO has always been treated as a tax preference item.Under Section 55 of the Code, AMT is computed on the amount of AMTI in excess of the applicable exemption amount ($72,450 for married taxpayers filing jointly and $47,450 for single taxpayers in 2010). If the AMT exceeds the taxpayer's regular tax in a given year, the taxpayer must pay the AMT amount rather than the regular tax amount. The difference between AMT and regular tax in any year is allowable as a credit against regular tax in future years when no AMT is due pursuant to Section 53 of the Code. Thus, AMT payment essentially serves as a prepayment of regular tax and accordingly offsets any deferral benefit that the taxpayer would otherwise enjoy in a year when AMT exceeds regular tax.
