In article <09c69c88-bbd4-4292-8e8f-040e5625c684[at]e23g2000prf.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -


There is now a refundable credit; that's new.


And remember that when you finally sell the stock, the basis for
regular income tax is just the exercise price, while the basis for
AMT is the exercise price plus the Bargain Element (what was added
to the 6251 in the year of exercise). This produces a smaller gain
for AMT than for regular income tax and helps lower AMT and/or
produce an AMT credit.


You didn't ask, but only AMT timing issue items may be used to
calculate AMT credit. And for most taxpayers -- almost all --
the three timing issues of concern are ISO exercise bargain
elements, depreciation, and passive activity differences.


Non-timing issues such as loss of Schedule A deductions or
dependency exemptions are permanent and not subject to
AMT credit.


Anyway, if you haven't tried this a few times, remember you may be
attaching to your tax return both a regular tax and also an AMT
version of several forms and schedules, including Schedule D
already mntioned, and the passive Activities and depreciation
forms.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
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On Jan 11, 6:26*pm, kam...[at]panix.com (Arthur Kamlet) wrote:

- quote -

So the difference between market and strike price at the time of
exercise times the number of shares minus commissions gets reported
one the AMT form 6251 line 13 ("Exercise of incentive stock options
(excess of AMT income over regular t ax income)"). But on form 8801,
you get a credit for the AMT tax on stock options because you don't
have to report your stock option phantom profit on this form. Is my
reasoning correct? And is the AMT credit a refundable credit?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <53d24731-692c-4247-86b3-7f2163bd7a49[at]k2g2000hse.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -



If ISOs there is no FICA tax on the ordinary income rsulting from
a disqualifying disposition. An ISO with a same day exercise & sale
of course is disqualifying.



- quote -


AMT could be affected simply because AGI is raised.



If this is an ISO, and not disqualified in the year of exercise,
then the bargain element (profit upon exercise) is additional
income for tentative minimum tax calculation, and the bargain
element is not added to the cost basis for AMT.

--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 9, 12:08*pm, jo...[at]iecc.com (John L) wrote:

- quote -

In addition to all the other responses, there is also social security,
medicare, state tax on the $31. I'm not sure if qualified employee
stock options have social security and medicare, but I'm pretty sure
non-qualified employee stock options do. The employer has to also pay
their share of social security and medicare.

Is there any AMT impact from exercising your options into stock and
holding?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Wed, 9 Jan 2008 18:18:24 EST, kamlet[at]panix.com (Arthur Kamlet)
wrote:


- quote -

In fact, I was so impressed, I am about to ask a "Second Question"

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <barmar-325F67.17553109012008[at]comcast.dca.giganews.com> ,
Barry Margolin <barmar[at]alum.mit.edu> wrote:
- quote -


You are both right.


When doing a same day exercise and sale with a NQSO, the
Bargain Element, which is the difference between FMV of
the stock at time of exercise and the exercise price, is
added to taxable wages (and FICA wages) on the W-2 form.

And W-2 Box 12 Code V tells you the amount of the bargain
element, but it's already added into the W-2 wages.

So as we can see, the bargain element (the "profit") is
going to be treated as earnd income and taxed as ordinary
income.

Since it was a same day exercise and sale, a 1099-B will list
the sales price, usually the gross sales price.

That sale gets reported on Schedule D Short Term.

The cost basis is the exercise priceplus the taxable bargain
element (which is equal to the FMV at exercise) plus the
broker's fee. So the ST capital loss on the Sch D is
just the broker's fee.

--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <Xns9A20930A08C9Eavocatstuyahoofr[at]130.133.1.4> ,
Stuart Bronstein <spamtrap[at]lexregia.com> wrote:

- quote -

Correct. He gets ordinary income of the difference between the option
price and FMV when he exercises the option, but then he ALSO gets a
short-term loss due to the fees from the immediate sale.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Arthur Kamlet wrote:
- quote -

I thought nonqualified stock options (assuming that's what they are)
are taxed as ordinary income when exercised, not even short term
capital gain.

Stu

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In article <fm3flp$hf3$1[at]aioe.org> , dpb <none[at]non.net> wrote:
- quote -


And since this was a same day exercise and sale, he should end
up with a small short term capital loss, representing the broker's
fee or commission.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Roy Starrin wrote:
- quote -

To be long-term capital gain, yes. It's still a capital gain, just
short term if not held for the requisite time (which is > 1 year, not
just one year, incidentally--one day over is enough, but has to be
over). The transaction(s) will still be reported on Sch D, but in the
short term section, not the long term.

--

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Roy Starrin wrote:
- quote -

Perhaps. Nonqualified incentive stock options are taxed as ordinary
income (the difference between the exercise price and the current
value) when they are exercised. So assuming his options are
nonqualifed, your son would have the same amount of taxable income
whether he sells the stocks or not.

If he exercises the option but does not sell them, and pays the tax,
any additional increase in value would be capital gain if he holds them
for the required period.

So the only way he could have done better would have been to have
exercised the options when the stock had a lower value.

If the options were qualified, there is no tax on exercise. To get
long term capital gain treatment he would still have to hold the actual
stock, rather than the options, for a year.

Stu

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Wed, 9 Jan 2008 15:08:48 EST, johnl[at]iecc.com (John L) wrote:


- quote -

So you are saying that he should have bought the stock, then waited a
year before selling it, for it to have been a capital gain event?

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- quote -

He pays tax on the $31 difference.

- quote -

Since he's not holding the stock for a year to be taxed as a long term
gain, it's ordinary income.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Am trying to get some tax advice for my son (who asked for it) re: his
exercise of a stock option.
Several years ago as an incentive to join his present company, he was
given the option to puchase several hundred shares of common stock at
what was then about $29/share. He now wishes to exercise the option
and immediately sell the stock. Stock is now about $60/share.
Since he never paid for the stock in the first place, does he pay tax
on the entire $60, or on the $31 difference.
I know the capital gains rates changed this year. At what rate will
this gain be taxed?
Anything else of significance?
TIA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >