AMD 2000 Annual Report Download - page 94

Stock Withholding Exercise
You can exercise options and pay the required tax withholding from the shares of
AMD stock that you would otherwise receive through exercising your options. You
receive the balance of the AMD shares obtained through the purchased options. To
withhold shares to pay your taxes, you must send a completed Share
Withholding/Delivery Election form and a Stock Option Exercise form to Treasury
Services.
You may not pay the exercise price of your options by having Treasury Services
withhold some of the shares that would otherwise be issued to you.
WHEN TO EXERCISE
It is entirely your decision when to exercise vested options, keeping in mind
the expiration date for your options. (See the sections Exercising Stock Options
and When You Leave AMD.)
The timing of an exercise and/or sale can have a large impact on any value you
ultimately obtain from the option. In deciding when to exercise, you may wish to
consult with your financial advisor, stockbroker, or reputable publications in
which stock market analysts voice their opinions about future potential stock
values. It is also prudent to consult with a tax advisor to determine the
impact of exercising stock options on your tax obligations.
On the date... You Owe Federal Taxes on...
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Your stock option No taxes are due.
grant is approved
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You exercise your The difference (gain) between the market
options and sell value of the shares of AMD common stock
the shares of AMD on the exercise date, and the exercise price
stock at a later date. of the options upon purchasing the options.
The gain is taxable as ordinary income and
subject to mandatory withholding for federal
income, FICA, Medicare and applicable state
and local taxes.
When you sell the shares of stock, you owe
tax on the difference between the market
value of the shares on the sale date and the
market value of the shares on the option
exercise date. Gains are taxed at the short-
term or long-term capital gains rate based on
how long you have held the shares. The hold-
ing period starts on the option exercise
date.
Months Held Capital Gains Rate
12 or less short-term
more than 12 long-term
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You exercise your The difference between the market value of
options and sell the the shares and the exercise price of the
shares on the same options. The gain is taxable as ordinary
day. income and subject to mandatory withholding
for federal income, FICA, Medicare and
applicable state and local taxes.
TAXES
Your stock options are what the IRS calls "nonqualified" options. The table
above summarizes the current U.S. federal tax consequences associated with these
options. Depending on your state of residence, you may also owe state and local
taxes when you exercise your options or sell the shares obtained by exercising
your options.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001