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Posted by deja_bhoot2000 on April 25, 2006, 7:49 am
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I have nonqualified stock options (NQSO) from my employer
that is vested. In order to exercise, I have to pay
-- the offering price (fair market value as of the time the
option was granted); PLUS
-- Fed income tax + SS + Medicare + CA SDI + CA taxes = about
45% on the "paper gain"
For example, if the option was granted at $10 and the current
price of stock is $50, I have to pay $10 + 45% of the
($50-$10) gain = $10 + $18 = $28 per share.
Company offers an arms-length loan at market interest rate
to help with this exercise. The interest rate would be
between 6.5% and 7.25% (depending upon credit rating).
Would this interest be deductible as investment expense on
Schedule A, if I itemize?
Bhoot
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