NVIDIA 2013 Annual Report Download - page 105

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reside or the taxation consequences with respect to participation in any component of the Amended and Restated 2012
Purchase Plan not intended to meet the requirements of Section 423 of the Code. The information is based upon current
federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any
participant may depend on his or her particular situation, each participant should consult the recipient’s tax adviser regarding
the federal, state, local, and other tax consequences of the grant or exercise of a purchase right or the disposition of stock
acquired under the Amended and Restated 2012 Purchase Plan. The Amended and Restated 2012 Purchase Plan is not
qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends
on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of our tax reporting obligations.
Under the component of the Amended and Restated 2012 Purchase Plan that is intended to qualify as an “employee
stock purchase plan” within the meaning of Section 423 of the Code, a participant will be taxed on amounts withheld for
the purchase of shares of our common stock as if such amounts were paid directly to the participant. However, no taxable
income will be recognized by a participant, and no deductions will be allowable to us, upon either the grant or exercise of
purchase rights. Taxable income will not be recognized until there is a sale or other disposition of the shares acquired under
the Amended and Restated 2012 Purchase Plan, or in the event the participant should die while still owning the purchased
shares.
If a participant sells or otherwise disposes of the purchased shares within two years after the beginning of the offering
period in which such shares were acquired or within one year after the actual purchase date of those shares, then the participant
will recognize ordinary income in the year of sale or disposition equal to the amount by which the fair market value of the
shares on the purchase date exceeded the purchase price paid for those shares, and we will be entitled to an income tax
deduction, for the taxable year in which such disposition occurs, equal in amount to such excess. The participant will also
recognize a capital gain to the extent the amount realized upon the sale of the shares exceeds the sum of the aggregate
purchase price for those shares and the ordinary income recognized in connection with their acquisition.
If the participant sells or disposes of the purchased shares more than two years after the beginning of the offering period
in which such shares were acquired and more than one year after the actual purchase date of those shares, the participant
will generally recognize ordinary income in the year of sale or disposition equal to the lesser of (a) the excess of the fair
market value of the shares at the time of such disposition over the purchase price or (b) the excess of the fair market value
of the shares as of the beginning of the offering period over the purchase price. Any further gain or any loss will be taxed
as a long-term capital gain or loss. We will not be entitled to an income tax deduction with respect to such disposition.
If the participant still owns the purchased shares at the time of death, then a transfer by the estate will be considered a
distribution and the lesser of the following amounts will be treated as ordinary income: (a) the excess of the fair market
value of the shares at the time of death over the purchase price or (b) the excess of the fair market value of the shares as of
the beginning of the offering period over the purchase price. Any further gain or any loss will be taxed as a long-term capital
gain or loss.
New Plan Benefits
Participation in the Amended and Restated 2012 Purchase Plan will be voluntary and each eligible employee will make
his or her own decision whether and to what extent to participate in the Amended and Restated 2012 Purchase Plan. In
addition, we have not approved any grants of purchase rights that are conditioned on stockholder approval of this Proposal
5. Accordingly, we cannot currently determine the benefits or number of shares that will be received in the future by individual
employees or groups of employees under the Amended and Restated 2012 Purchase Plan. Our non-employee directors will
not be eligible to participate in the Amended and Restated 2012 Purchase Plan.