What are employers’ reporting requirements, and is AMT “prepayment” long?
December 10, 1998
Subject: ISO Question
Date: Wed, 03 Nov 1999
A couple of questions regarding incentive stock options:
- What are the employer’s reporting requirements to the IRS? Is there a 1099 or some other report that states the AMT preference amount? Is the ISO preference strictly reported by the taxpayer on an honor basis (like donations, etc.)?
- If you are a buy and hold type of investor I guess this AMT “prepayment” could be a pretty long prepayment? Especially if you are getting more ISOs every year and exercising some every year, it sounds like your AMT will always be exceeding your regular tax.
Question 1 – There is no employer reporting requirement relating to the exercise of an incentive stock option (unless there is an early disposition – added to W-2.)
Question 2 – You are right. Many executives who continuously receive incentive stock options are perpetually subject to the AMT.