Bruce Brumberg and Lynnette Khalfani
UPDATED! This tax return season has the potential to be more confusing than most if you sold stock last year. You must now file the new IRS Form 8949 along with the revised Schedule D. This change stems from the expansion of the information that brokers must report to you on IRS Form 1099-B. Read this article for tips on these and other crucial tax return topics.
The myStockOptions.com Editorial Team & Contributors
Tax reporting with incentive stock options (ISOs) can be tricky. Learn what you need to report on your return at each stage of your ISO's life cycle.
Tom Davison and Liam Hurley
UPDATED FOR 2011! The time right after you have completed your tax return is ideal for big-picture financial planning. You can more accurately project your income and likely tax situation for the remainder of this year and the next, including AMT risk and capital-loss carry-forwards, to develop your strategy.
Alan Ungar
The tax reductions of the past few years have brought both good and bad news for holders of incentive stock options. While you may have lower capital gains rates when you hold the shares long enough after exercise, it is harder to avoid the risks of the alternative minimum tax (AMT) and to fully recover any AMT credit.
Bruce Brumberg and Matt Simon
Until fairly recently, alternative minimum tax (AMT) credits could be applied against your tax bill only in years when your regular tax liability exceeded your AMT liability. However, Congress now allows a faster rate for using AMT credits that are more than three years old. This article explains what you need to know about this "refundable" AMT credit, which is available through 2012.
Kaye A. Thomas
Special rules for old unused AMT credits, first available in 2007, were drastically revised for the tax years 2008 through 2012. This is the first of two articles on the refundable AMT credit, which provides a way for many people to use more AMT credits than they could under the regular rules.
Kaye A. Thomas
Special rules for old unused AMT credits, first available in 2007, were drastically revised for the tax years 2008 through 2012. This is the second of two articles on the refundable AMT credit, which provides a way for many people to use more AMT credits than they could under the regular rules.
Tom Davison
Even under President Barack Obama, the Bush administration's 2003 tax cuts and later extensions (now through 2012) continue to affect tax strategies for NQSOs, ISOs, and restricted stock.
Michael Frank
The IRS has issued final regulations on ISOs. Understand how these final regulations increase the risks of early exercise.
Kaye Thomas
A trap awaits those who, after selling shares from exercised ISOs to avoid AMT, want to buy back the stock.
W.E.B. Bantling and Michael Beriss
UPDATED FOR 2011! Learn about year-end planning specifically for incentive stock options, including ideas related to the alternative minimum tax.
Christine Benz
Morningstar
A collection of ideas for limiting AMT, including one related to incentive stock options.
Julian Block
Wealth Manager
Exercising ISOs can trigger the nightmare of the alternative minimum tax. Don't expect much help from the new law about refundable AMT credits.
Andrea Coombes
MarketWatch
Tax professionals often suggest "multiyear planning" to avoid the alternative minimum tax, as with incentive stock options.
IRS and US Department of the Treasury
The Treasury and IRS have warned taxpayers against several frivolous arguments you should not make on tax returns. The IRS has been aggressively pursuing and winning court cases against such arguments.
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Experts suggest several strategies for you to consider when you exercise ISOs and are concerned about triggering the alternative minimum tax. For example, near year-end or at the beginning of the year, you can...
When you are intermittently subject to the alternative minimum tax (AMT), tax advisors suggest different planning ideas on shifting income and deductions. You have much less flexibility in your planning when you project paying AMT for the next several tax years. Strategies for reducing the likelihood of triggering the AMT, and for minimizing the amount of AMT, are...
One strategy for minimizing AMT is to spread out the exercise of ISOs over...
It's not that simple. AMT requires you to account separately for ISO shares not only at exercise but also when the shares are sold. If you paid AMT as a result of exercising ISOs, your sale of the ISO shares provides an opportunity for you to recover...
Yes. The AMT from your ISO exercises might be so high this year that you can also exercise NQSOs and essentially not pay any tax on the spread...
This depends on how long ago you exercised the ISOs that triggered the alternative minimum tax. The 2008 version of the new AMT credit law, discussed below, is most favorable for you. First, however, some background on the law may be helpful...
As long as you sell the shares on or before December 31, you will...
It would be a disqualifying disposition, but you still have an AMT preference item for your...
You need to pay enough tax during the year through withholding or estimated tax payments to avoid penalties and interest. The tax that has to be paid includes any AMT attributable to the exercise of ISOs or any ordinary income from a disqualifying disposition. In these ISO situations, your employer does not...
Whether you still hold the ISO stock or you sold it in the past year, once you have paid AMT your tax returns get complex. The AMT is basically a prepayment of the tax on ISOs. You will get a credit for it in subsequent years, even when you have not sold the ISO stock. This means, for example, that you still need to...
Generally, if you find a tax-return error and the statute of limitations period has not yet ended, you are required to file...
When you trigger the alternative minimum tax (AMT) from an ISO exercise, you create dual-basis stock. This means that for the purposes of calculating your AMT gain and adjustment, the basis of the shares will be calculated differently for the regular tax and for AMT. For your regular tax, the basis is...
Qualified dividends do receive special tax treatment when they are part of your net capital gain. The amount of AMT is capped by the...
Assume that the ISO exercise/hold or other parts of the AMT calculation will trigger AMT. A rule of thumb is...
To eliminate the tax, you would have had to sell the stock in the calendar year of your exercise. While some general approaches to this situation exist, only with ISO stock is there a possible escape hatch. Fortunately...
Generally, stock options are exercisable when they vest. However...
If you sell company shares for a loss and buy more company shares within 30 calendar days before or after the loss transaction, the federal tax code will...
The wash sale rule disallows the loss on a sale of stock if the same stock...
It is easy to make tax return mistakes that lead to paying more than necessary or (perhaps worse) an IRS review. This tax season in particular will be more confusing than most because of the new Form 1099-B, the new Form 8949, and the significantly revised Schedule D...
Unlike with a stock sale, gifting ISO stock does not result in an AMT adjustment for the difference...
Some experts take the position that an AMT credit transfer, at least in a community property state...
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