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Date:   2 Feb 2009
From:   John

Hi Michael,

Your web site was GREAT/helpful for explaining the 2008 ISO AMT change enacted by Congress!

Were any similar reforms enacted for ISO/AMT by the State of California.

Just curious,
John

Answer

Date:   5 Feb 2009

Hello John,

No. California has not conformed to these changes and, considering its financial condition, I don't expect California to conform. Unused minimum tax credits aren't as big of a problem for California because the regular tax rate for the sale of stock (9.3%) is greater than the AMT rate (7%). There is still a problem when a huge value at the time an incentive stock option is exercised is erased by a declining stock market.

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.