Do I get the 15% long-term capital gains tax on my incentive stock options?
April 22, 2005
Subject: AMT question
Date: Sun, 20 Mar 2005
I exercised some ISOs in 1997 and 1998 and held the shares. The ISOs were granted at least 5 years before I exercised them. I didn’t know anything about AMT at the time. Now I’m thinking about selling the shares. I thought that if I held the shares that long, I would just have to pay the 15% long-term capital gains tax. Observations?
Date: Fri, 08 Apr 2005
You have met the holding period requirements for regular tax purposes. If the shares were vested when you exercised the options, you should also meet the holding period requirements for AMT. A question could be whether you are entitled to a basis adjustment for the shares for AMT reporting. If you didn’t report any AMT adjustment when you exercised the ISOs, probably not. So, you should be entitled to the 15% capital gains rate for the sale.