StockOpter® 2.0 offers many new features and enhancements including the following:

• Easier and more flexible data entry
• More detailed analysis of stock information
• More support for tax impact analysis
• More client reports
• More flexibility in adjusting worksheet views
  

These features and enhancements are summarized below. For information about how to use them, see the StockOpter® Help file.

Easier and more flexible data entry

Guided Entry

Guided Entry is a step-by-step guide for entering data in a new StockOpter® workbook. When you start StockOpter®, the Welcome sheet displays. You can do either of the following:

• Click the Start the Tour button to see an overview of StockOpter® features.
• Click the Start the Guide button to begin entering data.
  

To use Guided Entry, click the Start the Guide button. When you do this, the screen splits and the Guided Entry text displays in the bottom window. The Tour/Guide navigation box also displays. Follow the Guided Entry steps to enter data into a new worksheet. As you complete each step, click the Next arrow to move on to the next step, click the Previous arrow to go back one step, and click the Close icon to end Guided Entry.

Edit grant information

Now you can use the Editor to edit grant information. When you do this, the edited information will replace existing information in the light yellow cells on the BaseCase sheet and on additional Case sheets, and will recalculate the values in the cells that are dependent on the changed information.

To edit grant data using the grant editor

1. Click to open the Case sheet you want to edit.
2. Click on a cell within the stock grant you want to edit.
3. Click the Editor icon on the StockOpter® toolbar. The corresponding data entry form displays with the grant data.
4. Type the changes and then click Save Edits. Data in the light yellow cells on the BaseCase sheet updates and the new data automatically propagates through all the other Case sheets.
   

Year-end case data roll-over

At the end of each year, you will need to update existing models. With StockOpter® 2.0, you can automatically roll data in Column C into Column B of the case sheets. To do this, you must specify which case in the model most accurately depicts the client’s situation. That case is used as the basis for updating the data. The data in that case is rolled into the BaseCase, and the rollover case thus becomes the BaseCase. All subsequent case sheets use the new BaseCase data as the starting point for planning purposes.

The Assumptions data is also updated to the next year. This keeps the Assumptions data current for a more accurate analysis.

To update a model to the next year

1. On the SO Tools menu, point to More and click Year End Grant Data Rollover. The StockOpter® year-end rollover procedure box displays.
2. In the Choose rollover case sheet box, click to select a case sheet.
3. Click Start. A warning message displays.
4. If you wish to continue, click OK.
5. Click OK at the Information message.
6. Click Cancel.
   

The data is updated to the new year.

Specify client relationship with corporation

StockOpter® 2.0 gives you the flexibility to specify whether a client is an employee or contractor of the corporation issuing the option grant. To do this, click the Editor icon and click the Basic Information tab. In the Relationship with issuer box, type 1 if the client is an employee, and type 2 if the client is a contractor.

Detailed entry of client wage and tax history

You can now break down a client’s wage and tax history into greater detail. This information appears in the Tax Calculations section of the Assumptions sheet and contains estimates of tax liability that will be incurred prior to, and independent of, any stock options activity.

To access these new categories, click the Editor icon to open the Assumptions wizard. Click the Income, Deductions, and Tax Estimates tabs to enter data in the appropriate categories.

The new wage and tax categories in StockOpter® 2.0 include:

Income

• Salaries and wages, option holder
  
• Salaries and wages, spouse
  
• Self-employment income, option holder
  
• Self-employment income, spouse
  
• Investment income
  
• Long-term capital gain (loss)
  
• Other income

Deductions

• Deductible taxes, excluding state income tax
  
• Interest paid on home equity loans
  
• Investment interest expense
  
• Other investment expense, excluding investment interest
  
• Other itemized deductions, excluding state income tax
  
• AMT adjustments and preferences
  
  • Exclusion items
    
  • Deferral items
    

Tax Estimates

• Investment interest carryforward
  
• Capital loss carryforward - AMT basis
  
• Investment interest carryforward - AMT basis
  
• Capital gains tax rate override
  

Increased fine-tuning of Assumptions sheet data

You can turn off the auto-fill cells function on the Assumptions worksheet for increased fine-tuning of data. When you type data in Column C of certain rows, the auto-fill function automatically fills in the rest of the cells in that row with the data in Column C. For example, if the option holder is single but plans to be married in two years, turn off auto-fill in order to type 1 in the first year (Column C) and 2 in third year of the row Filing status. Otherwise, StockOpter® will type 1 in all years of the row to the right of Column C.

To turn off the auto-fill cells function, click the Customize StockOpter® icon. In the Customization possibilities… box click the Other tab, then click the No radio button.

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More detailed analysis of stock information

Stock split calculation

You can model both stock splits and reverse splits in StockOpter®. When you model a stock split, you must provide the ratio of new shares to old shares (or post-split shares to pre-split shares). StockOpter® adjusts the number of all stock and options in the model by this ratio. The exercise price and stock dividend estimates are adjusted by the inverse ratio throughout the model.

For example, assume an initial StockOpter® case with a single ISO with 5,000 unvested options, an exercise price of $4.00, and an estimated market price of $16.00 in the first year. Implementing a 2:1 stock split will result in an ISO with 10,000 unvested options, an exercise price of $2.00, and an estimated market price of $8.00.

Modeling a reverse split undoes the effects of a previously modeled stock split. You can also use a reverse split to model some corporate mergers.

To model a stock split

• Click the Stock Split icon on the SO Tools menu. The Stock Splits box displays.
  
• In the Implement a stock split of text box, click the arrow to select the number of stocks held after the stock splits.
  
• In the for text box, click the arrow to select the number of stocks held before the stock split.
  
• Click Implement.
  

The associated numbers are adjusted throughout the model.

Inclusion of underlying stock dividends

With StockOpter® 2.0, you can keep track of stock dividends. Dividend information appears under the heading Stock Dividend Information on the Assumptions sheet. The row Estimated per share dividend (12/31) on the BaseCase sheet is initially calculated from data entered on the Assumptions sheet.

The estimated per-share dividend applies to each stock grant in a StockOpter® model. All dividend income from ISO stock option activity is calculated for all exercised and unsold shares each year. Dividends are calculated for exercised and unsold NQSO shares each year and for vested RSPs. The dividend amount is added to the Ordinary taxable amount for each stock grant.

To enter dividend data on the Assumptions sheet

• Click the Assumptions tab to view the Assumptions sheet.
  
• On the SO Tools menu, click the Editor icon. The Assumptions wizard displays.
  
• Click the Stock Info tab and type the data in the boxes as follows:
  
  • Per share dividend (1/1 of first year of model) - Type the expected annual dividend per share for the first year of the model in this row.
    
  • Estimated annual appreciation of dividend - Type the estimated annual appreciation of the dividend. This number is a percentage.
    
• Click Done. The data displays in the yellow cells in Column B on the Assumptions sheet.
  

Details for Totals From Stock Option Activity

The Totals from Stock Option Activity section contains more detailed information summarizing the key values from exercise and sale strategies. This new information includes:

• Value of unvested options and restricted shares - The value of all unvested ISO and NQSO options and unvested Restricted Stock based on the stock price at the end of the year.
  
• Portfolio diversification % - The percentage of dollars invested outside of the stock options or stock acquired through options.
  
  • If the portfolio diversification is 0%, then there is no diversification and you are invested 100% in stock options or stock of the company.
    
  • If the portfolio diversification is 30%, then you have 30% invested outside of the stock options or stock.
    

The row Portfolio Diversification % is one of many possible measures of portfolio diversification. You can create your own row(s) and formulas for other measures. The Portfolio Diversification % is supplied primarily as a gauge for this key planning parameter, and can be useful as a target for Excel's Goal Seek utility.

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More support for tax impact analysis

FICA and self-employment tax calculations

The Total Tax Calculation section of the Assumptions sheet summarizes the key types of tax liability incurred independent of any stock option activity. New in StockOpter® 2.0 are FICA withholding on wages and self-employment tax.

Self-employment tax is calculated based on information entered in the Self-employment income areas on the Income tab of the Assumptions wizard. FICA withholding on the option holder’s wages and salaries (also on the spouse’s wages and salaries, if applicable) is calculated automatically. Calculations take into account compensation (salary and self-employment income) both from the Assumptions sheet and from stock option activity.

Support for long-term capital gains from non-stock option activities

Now you can include long-term capital gains from non-stock option activities in your model. New, more detailed categories enable you to separate income into several categories, including a category called Long-term capital gain (loss). This category includes net long-term capital gains or losses and capital gains distributions from mutual funds.

Other new income categories include:

• Salaries and wages (both for the option holder and the option holder’s spouse)
  
• Self-employment income (both for the option holder and the option holder’s spouse)
  
• Investment income
  
• Other income
  

To enter long-term capital gain and other income data

1. Click the Assumptions tab to view the Assumptions sheet.
   
2. On the SO Tools menu, click the Editor icon. The Assumptions wizard displays.
   
3. Click the Income tab type the data in the text boxes.
   
4. Click Done. The data displays in the yellow cells on the Assumptions sheet.
   

Separate calculation of deferral and exclusion items

AMT adjustments and preferences are considered to be either exclusion items or deferral items. StockOpter® 2.0 contains separate rows for each. Enter this data on the Deductions tab of the Assumptions wizard.

Include on these two lines total exclusion items and total deferral items other than those that qualify as itemized deductions. For example, interest income from private activity bonds should be included in the row Exclusion items. On the other hand, real property tax, which also qualifies as an exclusion-type tax preference, should not be included in this row, since it should have already been entered in the row Deductible taxes, excluding state income taxes.

Deferral items are alternative minimum tax adjustments that do not cause a permanent difference in taxable income over time. The most common include post-1986 depreciation, incentive stock options, passive activities, pre-1987 depreciation, installment sales, and large partnerships.

General 20% capital gains rate override

You can choose to override the 20% capital gains rate. To do so, type an estimated capital gains tax rate for the year or years in which you wish to override the calculated amount on the Tax Estimates tab of the Assumptions wizard. Long-term capital gains will otherwise be taxed at either the 10% or 20% rate.

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More client reports

Inventory report added to “Client Deliverables”

The Inventory report, a new report available as a client deliverable, shows the option and share inventories available for exercise or sale in each year. To view the Inventory report, click the Inventory sheet tab.

Magnification adjustment for each worksheet

The Customize StockOpter® allows you to change certain elements in the way that StockOpter® looks. The magnification adjustment allows you to change your view of each worksheet by zooming in and out.

To use the Zoom feature, click the Customize StockOpter® icon. Click the Other tab, and adjust the magnification in the Zoom/magnification value for each worksheet box click the arrow up or down to the percentage of current size that you want.

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