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Are you still susceptible to this if they are ISOs? My understanding is that ISOs are only ever taxed at the time of sale. Sounds like you're dealing in an ISO
by cushychicken 6y ago
Are you still susceptible to this if they are ISOs? My understanding is that ISOs are only ever taxed at the time of sale.
Sounds like you're dealing in an ISO quantity beyond the limits my mind can comprehend though.
- sanity31415 6y agoHmm, I'm not sure - how would I tell if they're classified as ISOs?
- jonathankoren 6y agoIt would be in your grant letter explaining the number of options and the strike price.
- jonathankoren 6y agoHe’s being hit by the AMT due to the value of the options. If you’re hit by the AMT, you’ll owe taxes on the spread between the strike and FMV on exercise, even though you haven’t sold them.
- deleted 6y ago[deleted]
- redfern314 6y agoNot quite true - ISOs can incur AMT at time of exercise, which is kind of complicated and doesn't always create a tax burden. In the $100k range, it probably will, but they'd have to do the calculation to find out. https://www.esofund.com/blog/amt-tax https://www.esofund.com/blog/amt-tax Regardless, they'll still have to front the $ to exercise and be left with illiquid stock. It's not a good situation.
- s17n 6y agoAs others have said, AMT doesn't respect ISOs, which makes ISOs pretty useless.
- 0xEFF 6y agoNot entirely, if you don't owe AMT in subsequent tax years then you get the money back as a tax credit. https://www.kiplinger.com/article/taxes/t055-c000-s001-the-alternative-minimum-tax-credit.html https://www.kiplinger.com/article/taxes/t055-c000-s001-the-a...