NASSAUSUFFOLK

 View Only

  • 1.  Which basis for sale of ISO stock purchased under AMT in prior year?

    Posted 07-10-2021 06:12 AM
    ISO (stock options) are exercised this year and the taxable income is so high that the AMT is invoked and taxes have to be paid on the phantom profit (the bargain element). Assuming that the stock will be held for over 12 months before selling. My question is, if the stock is sold next year for the same price as the market value when the option was exercised, what do I use for the basis on schedule D? The actual cost when the stock was purchased, or the FMV (the cost + the bargain element) when it was purchased?

    I am confused and wondering if, although AMT is paid on the phantom profits when the option is exercised, is there additional LT cap gains tax on the same amount when it is sold over 12 months later? That doesn't make sense but I'm not sure where I am off.

    ------------------------------
    Yves Richards
    Yves Richards, CPA
    Baldwin NY
    ------------------------------


  • 2.  RE: Which basis for sale of ISO stock purchased under AMT in prior year?

    Platinum Most Valuable Member
    Posted 07-12-2021 07:20 AM
    Ives

    You will use historical cost basis for schedule D, and the AMT cost basis( historical cost plus the
    cost to exercise the ISO) to come up with AMT gain(loss) from sale as an adjustment on form 6251 in
    year of sale.

    ------------------------------
    Michael Jaffe
    CPA
    MICHAEL B. JAFFE, CPA PC
    Commack NY
    ------------------------------

    Original Message


Discussion Disclaimer

The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.