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Subject:   Question regarding stock options
Date:   Thu, 22 Apr 2004
From:   Steve

I have an ISO for 100,000 shares at 25¢ per share in a public company, traded on the Pink Sheets. The current value of the stock is about $7 per share. If I exercise my options, I will be issued restricted stock and must hold it for one year before I can sell it. Can I avoid the AMT until the restrictions lapse?

Answer

Date:   Fri, 28 May 2004

Hello Steve,

No. See "If stock is not transferable, do I still owe AMT?". Also, according to Internal Revenue Code Section 83(b)(a), no adjustment to value is allowed for a restriction other than a restriction, which by its terms will never lapse.

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.