Microsoft and the Tax Reform Act of 1986
13 Pages Posted: 21 Oct 2008
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Microsoft and the Tax Reform Act of 1986
Abstract
Students analyze an employer and an employee's preferences for nonqualified stock options versus incentive stock options. Employer Microsoft issued large amounts of incentive stock options prior to its initial public offering (IPO), which occurred shortly before the Tax Reform Act of 1986 dramatically changed tax rates.
Excerpt
UVA-C-2186
Rev. Sept. 10, 2010
MICROSOFT AND THE TAX REFORM ACT OF 1986
William H. Gates III and Paul G. Allen formed a partnership in 1975 with a mission “to put a computer on every desk and in every home.” The partnership, now known as Microsoft Corporation (ticker: MSFT), developed system and application software for desktop computers.
Milestones of Microsoft's first 10 years include:
1975 Created software programs used on personal computers made by Apple, Tandy, and Commodore.
. . .
Keywords: Employee stock ownership tax issues
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