Is my company’s estimate of my options valid?
September 26, 2011
Date: Sat, 14 Mar 2009
When my employer granted my initial options in 1997, I was given a letter showing they took $8,000 of my annual compensation and converted it into stock options. Since this amount was not reported on my W-2 for that year, did I really pay for these options and does this establish a cost basis for the options, or did my employer simply use a notional amount to calculate how many options they would grant, and then add that “value” to my cash compensation to come up with my total compensation?
Date: 6 Apr 2009
Since you reported no compensation income for the options you received, they had no tax basis or “cost.” Personally, I think the “value” your employer showed on that statement was nonsense.