Exercise of ISOs and sale of stock in connection with corporate transaction is a disqualifying disposition

Article Abstract:

The IRS ruled in Technical Advice Memorandum 9603003 that a taxpayer had exercised his incentive stock options by participating in the stock purchase agreement in which all option holders would exercise their options and sell the stock to the acquiring corporation. The taxpayer argued under the step-transaction doctrine that the incentive stock options were sold to the acquiring corporation and that income should be recognized when the installment payments are received. The IRS disagreed and found the exercise of the options to be a disqualifying disposition.

Taxation, Acquisitions and mergers, Incentive stock options

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The role of convertible securities in corporate finance

Article Abstract:

No single aspect of convertible securities explains their popularity, but their flexibility suggests their use will grow. Many economists have attempted to identify a single reason why convertibles may be beneficial, or simply popular, to investors or companies seeking to raise cash, but an analysis of these theories suggests that no two issues of convertibles are made for the same reason. A detailed analysis of their uses is presented.

Analysis, Convertible securities, Swaps (Finance)

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