An employee leaving our Private Subsidiary wants to exercise his stock options, despite his strike price being higher than the current valuation ($1.00 vs $0.84).
Was wondering what the tax implications are for this? I assume he will just pay the Company the strike price, because there is no gain.
For the employee, this is an identical tax situation to an at-the-money option purchase. They're buying an asset with a specific cost basis.
For the company, you are just issuing shares from treasury as authorized... debit cash, credit additional paid-in-capital and equity. There is no tax consequence for this money received.
