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Subject:   Charitable contribution of stock from ISO
Date:   Mon, 14 Feb 2000
From:   Todd

I am receiving iso's and would like to donate stock to charity. I understand if I donate within 12 months I must report the difference between the strike price and the fair market value as income to deduct the stock on schedule A. What if I donated the stock and did not deduct it on schedule A? Could the donated shares be deducted from the total iso shares reported on form 6251 thus lowering my AMT liability? Great article and web sight. They answered all my other questions!!

Thanks

Todd

Answer

Hello Todd,

Sorry Todd, but, if I understand your question correctly, there is no option to eliminate the AMT liability in this way.

However, by making a donation of the stock before the end of the year of exercise, you can offset the ordinary income with the charitable deduction (subject to the 50% of AGI limitation for charitable contributions). The tax preference is eliminated for the stock since the gain is reported as ordinary income.

I hope this helps.

Good luck!

Mike Gray

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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.