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Subject:  Exercise of ISO by "SWAP"
Date:  Thu, 18 Mar 2004
From:  Belen

Dear Mike;

I exercised an ISO of 25,000 shares at 20¢ per share, or $5,000. I swapped 2,222 shares at $2.25 per share. How do I present this on my tax return?

Thank you so much for whatever help you could extend me.
Belen

Answer

Hello Belen,

You don't.

You will still report the AMT adjustment for the options that you exercised, but there is no other information required to be presented.

I recommend that you get a tax return preparer to help you handle this correctly. Accounting for swaps is tricky.

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.