Subject: File No. S7-03-06
From: Russell D Horsley

December 27, 2006

This rule may create certain tax issues for some as it considers options as compensation only when paid and not of value when vested. Thus, would not the tax rate be at the full rate of normal pay and not at the investment rate?
IRS can make the case as the "pay" was not reportable thus it is not of value until paid (and expensed by the company).
All deferred compensation so treated as not "earned till paid" would fit this scenario.