Tax benefit from Stock Options benefit, reading, anybody, company, receive

domani

Hi,

Can anybody tell me how a company receive tax benefit from stock options? I don't catch this idea. (Book 3- reading 41 - page 571).

Micholien

Thank you for responding my question.

So the tax deduction could be recognized in BOTH income statement and tax return, right? (because you said a bit differently in your explanation and the example)

kamara5

Yes its on both the tax return and the income statement. Its just like an interest tax shield. Higher interest and option-related expense results in lower before tax income so there is a tax benefit.