How do I report ISOs donated to charity?

October 10, 2014

Date:   Thu, 15 Feb 2007
From:   Scott

Michael, my client exercised incentive stock options during November 2006 and then donated the stock to his church. The church immediately sold the stock.

Does my client still have to report the difference between the option price and the fair market value on the date of exercise as a preference item for AMT?

Any help is appreciated.

Thank you.


Date:   28 Feb 2007

Hello Scott,

No. You client has made a disqualifying disposition of the shares. Ordinary income should be reported on your client’s W-2 as additional wages for the disposition. Your client should be able to claim a charitable contribution for the tax basis of the shares.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options – Executive Tax and Financial Planning Strategies.

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