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This excerpt taken from the WBMD DEF 14A filed Nov 5, 2008. Federal
Income Tax Information
The following discussion is a summary of the federal income tax
consequences relating to the grant and exercise of awards under
the 2005 Plan and the subsequent sale of Common Stock that will
be acquired under this Plan. The tax effect of exercising awards
may vary depending upon the particular circumstances, and the
income tax laws and regulations change frequently.
Nonqualified Stock Options. There will be no
federal income tax consequences to a participant or to WebMD
upon the grant of a nonqualified stock option. When the
participant exercises a nonqualified option, however, he will
realize ordinary income in an amount equal to the excess of the
fair market value of the option shares that he receives upon
exercise of the option at the time of exercise over the exercise
price, and WebMD will be allowed a corresponding deduction. Any
gain that a participant realizes when the participant later
sells or disposes of the option shares will be short-term or
long-term capital gain, depending on how long the participant
held the shares.
Incentive Stock Options. There typically will
be no federal income tax consequences to a participant or to
WebMD upon the grant or exercise of an incentive stock option.
If the participant holds the option shares for the required
holding period of at least two years after the date the option
was granted or one year after exercise of the option, the
difference between the exercise price and the amount realized
upon sale or disposition of the option shares will be long-term
capital gain or loss, and WebMD will not be entitled to a
federal income tax deduction. If the participant disposes of the
option shares in a sale, exchange, or other disqualifying
disposition before the required holding period ends, he will
realize taxable ordinary income in an amount equal to the excess
of the fair market value of the option shares at the time of
exercise over the exercise price, and WebMD will be allowed a
federal income tax deduction equal to such amount. While the
exercise of an incentive stock option does not result in current
taxable income, the excess of the fair market value of the
option shares at the time of exercise over the exercise price
will be an item of adjustment for purposes of determining the
participant’s alternative minimum tax.
Stock Appreciation Rights. The participant
will not recognize income, and WebMD will not be allowed a tax
deduction, at the time a stock appreciation right is granted.
When the participant exercises the stock
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appreciation right, the fair market value of any shares of
Common Stock received will be taxable as ordinary income, and
WebMD will be allowed a federal income tax deduction equal to
such amount.
Restricted Stock. Unless a participant makes
an election to accelerate recognition of the income to the date
of grant as described below, the participant will not recognize
income, and WebMD will not be allowed a tax deduction, at the
time a restricted stock award is granted. When the restrictions
lapse, the participant will recognize ordinary income equal to
the fair market value of the Common Stock as of that date, less
any amount he paid for the stock, and WebMD will be allowed a
corresponding tax deduction at that time, subject to any
applicable limitations under Section 162(m) of the Internal
Revenue Code. If the participant files an election under
Section 83(b) of the Internal Revenue Code within
30 days after the date of grant of the restricted stock, he
will recognize ordinary income as of the date of grant equal to
the fair market value of the stock as of that date, less any
amount a participant paid for the stock, and WebMD will be
allowed a corresponding tax deduction at that time, subject to
any applicable limitations under Section 162(m) of the
Internal Revenue Code. Any future appreciation in the stock will
be taxable to the participant at capital gains rates. However,
if the stock is later forfeited, such participant will not be
able to recover the tax previously paid pursuant to his
Section 83(b) election.
Performance Shares. A participant will not
recognize income, and WebMD will not be allowed a tax deduction,
at the time performance shares are granted. When the participant
receives payment under the performance shares, the amount of
cash and the fair market value of any shares of stock received
will be ordinary income to the participant, and WebMD will be
allowed a corresponding tax deduction at that time.
This excerpt taken from the WBMD DEF 14A filed Aug 14, 2007. Federal
Income Tax Information
The following discussion is a summary of the federal income tax
consequences relating to the grant and exercise of awards under
the 2005 Plan and the subsequent sale of common stock that will
be acquired under this Plan. The tax effect of exercising awards
may vary depending upon the particular circumstances, and the
income tax laws and regulations change frequently.
Nonqualified Stock Options. There will be no
federal income tax consequences to a participant or to us upon
the grant of a nonqualified stock option. When the participant
exercises a nonqualified option, however, he will realize
ordinary income in an amount equal to the excess of the fair
market value of the option shares that he receives upon exercise
of the option at the time of exercise over the exercise price,
and we will be allowed a corresponding deduction, subject to any
applicable limitations under Section 162(m) of the Internal
Revenue Code. Any gain that a participant realizes when the
participant later sells or disposes of the option shares will be
short-term or long-term capital gain, depending on how long the
participant held the shares.
Incentive Stock Options. There typically will
be no federal income tax consequences to a participant or to us
upon the grant or exercise of an incentive stock option. If the
participant holds the option shares for the required holding
period of at least two years after the date the option was
granted or one year after exercise of the option, the difference
between the exercise price and the amount realized upon sale or
disposition of the option shares will be long-term capital gain
or loss, and we will not be entitled to a federal income tax
deduction. If the participant disposes of the option shares in a
sale, exchange, or other disqualifying disposition before the
required holding period ends, he will realize taxable ordinary
income in an amount equal to the excess of the fair market value
of the option shares at the time of exercise over the exercise
price, and we will be allowed a federal income tax deduction
equal to such amount, subject to any applicable limitations
under Section 162(m) of the Internal Revenue Code. While
the exercise of an incentive stock option does not result in
current taxable income, the excess of the fair market value of
the option shares at the time of exercise over the exercise
price will be an item of adjustment for purposes of determining
the participant’s alternative minimum tax.
Stock Appreciation Rights. The participant
will not recognize income, and we will not be allowed a tax
deduction, at the time a stock appreciation right is granted.
When the participant exercises the stock appreciation right, the
fair market value of any shares of common stock received will be
taxable as ordinary income, and we will be allowed a federal
income tax deduction equal to such amount, subject to any
applicable limitations under Section 162(m) of the Internal
Revenue Code.
Restricted Stock. Unless a participant makes
an election to accelerate recognition of the income to the date
of grant as described below, the participant will not recognize
income, and we will not be allowed a tax deduction, at the time
a restricted stock award is granted. When the restrictions
lapse, the participant will recognize ordinary income equal to
the fair market value of the common stock as of that date, less
any amount he paid for the stock, and we will be allowed a
corresponding tax deduction at that time, subject to any
applicable limitations under Section 162(m) of the Internal
Revenue Code. If the participant files an election under
Section 83(b) of the Internal Revenue Code within
30 days after the date of grant of the restricted stock, he
will recognize ordinary income as of the date of grant equal to
the fair market value of the stock as of that date, less any
amount a participant paid for the stock, and we will be allowed
a corresponding tax deduction at that time, subject to any
applicable limitations under Section 162(m) of the Internal
Revenue Code. Any future appreciation in the stock will be
taxable to the participant at capital gains rates. However, if
the stock is later
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forfeited, such participant will not be able to recover the tax
previously paid pursuant to his Section 83(b) election.
Performance Shares. A participant will not
recognize income, and we will not be allowed a tax deduction, at
the time performance shares are granted. When the participant
receives payment under the performance shares, the amount of
cash and the fair market value of any shares of stock received
will be ordinary income to the participant, and we will be
allowed a corresponding tax deduction at that time, subject to
any applicable limitations under Section 162(m) of the
Internal Revenue Code.
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