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Subject:   AMT for private ISOs
Date:   Thu, 6 May 2004
From:   Mitch

If company stock isn't publicly traded, how can there be a fair market value for AMT calculation? My CPA says my stock is worthless until the stock is sold and the price is determined.

Answer

Date:   Fri, 28 May 2004

Hello Mitch,

There is a long line of cases and a huge body of work, including societies of professional appraisers, for valuing stock of companies that aren't publicly traded. Adjustments (discounts) are made for lack of control and lack of marketability. This has been a huge area of activity because it is the basis for estate planning using family limited partnerships. I'm sorry, but you (and your advisors) can't just "blow this off."

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.