On Jul 7, 9:59*am, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

I was going to answer this but I think if removeps-gro... just
furnished the link to Farimark and left out the rest it would
suffice. ed

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On Jul 6, 5:52 pm, "Will" <westes-...[at]noemail.nospam> wrote:

- quote -

There's an AMT tax credit, form 8801. Basically you calculate your
AMT tax excluding stock options and a few other things, which will
result in a lower AMT tax. They sometimes call this the alternative
alternative minimum tax. The difference between the regular AMT and
alternative AMT is your credit. You can use the credit in a future
year. I don't get it because you pay tax one year and get it back the
next year, so maybe someone else can claim how it works. There are
limits of how much of the credit you can claim the following year, and
unclaimed amounts may carry over to the following year.
http://www.fairmark.com/amt/credit.htm explains it well.

Also, the cost basis of stock sold in a future year may be different
for the AMT. I could be way off here, but this is how I think it
works by reading the instructions. For the regular tax the cost basis
is $20, and for the AMT it is $27. If the stock is $29 when you sell
in 2009 or a future year, then line 16 ("Disposition of property
(difference between AMT and regular tax gain or loss)") would be -$7 a
share because the regular gain is $9 and AMT gain is $2. The regular
gain of $9 has been included in your regular AGI. This -$7 a share
reduces your AMT taxable income. Long term gains and losses are not
subject to AMT, and are still taxed at 15%, along with qualified
dividends. However, a lower AMT taxable income increases the AMT
exemption, and thereby lowers the AMT tax. But I don't understand how
you can take both the credit and the cost basis.

Anyone know if the Bush tax cut is phasing out the phaseout of the AMT
exemption?

The California AMT form is schedule P. I don't know what the AMT
credit form is, or if there even is one.

Finally, just to be sure, are these incentive stock options?

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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. > << ------------------------------------------------------- >

An employee chooses to exercise stock options with a stock option buy price
of $20 on 8/1/2008 at a time the stock is trading for $27/share. In order
to get capital gains on the sale of the stock, it must be held for one year
after it is purchased. But if the employee holds the stock, they have an
alternative minimum tax problem based on the value of the stock at the time
they purchased it during the 2008 tax year. Is there any strategy to avoid
the AMT and get a capital gains treatment on the sale if the stock is held
for a year?

--
Will

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >