Should I avoid AMT by exercising ISOs in small amounts?
November 16, 2005
Subject: AMT advice
Date: Thu, 03 Nov 2005
I have been using a strategy whereby I attempt to avoid AMT by only exercising and holding small amounts of ISOs, because I was led to believe that AMT once paid was forever gone.
If AMT can be recovered via a carryover, that might change what I want to do.
Date: Fri, 11 Nov 2005
There is a minimum tax credit for “timing differences.” See IRS Form 8801 and instructions, and request our special report, Executive Tax Planning For Incentive Stock Options.
The strategy of making small exercises of ISOs can be letting the tax tail wag the dog. You can suffer a much bigger loss from a decline in the market value of the stock than the tax that you have to pay from exercising and selling the stock.
Our business is helping people walk through the minefield.