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Date:   Tue, 29 May 2001
From:   Clinton

I like the page on ISO's and AMT tax, however...

It still is not clear to me if you must sell your stock to be able to start claiming a credit on previously paid AMT taxes. For instance, I exercised stock in 2000, and can't sell them now, since they are not worth much, and my regular tax will be more than AMT tax this year. Can I get a credit for paying AMT last year on the exercise?

Answer

Date:   11 May 2001

Hello Clinton,

You aren’t required to sell your ISO stock to use your AMT credit.

However, the credit can be used up to the excess of the regular tax over the tentative alternative minimum tax. The bigger the difference, the more credit can be used, so you tend to use most of it when you sell your ISO stock.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.