Do I need to add the spread to the AMT calculation even if I my stock isn’t publicly sold?

May 10, 1999

Subject:   Re: Thank You
Date:   Tue, 02 Mar 1999
From:   Stephen


I exercised ISO stock in 1998 when I left my previous company. The company is still private trying to go IPO. When I exercised the stock, I received a printout from the company stating the fair market price they think the stock is at.

However, there is no normal channel for me to sell the stock now (we might even be forbidden to sell the stock until after a certain period after IPO, under the terms of the ISO). Nor do I have an unbiased way to determine the fair market value. Would I still need to add the spread to the AMT calculation?

Thanks in advance,



Date:   Mon 10 May 1999

Hello Stephen,

Thanks for writing.

Sorry I didn’t respond to you sooner, but your email got buried in the heat of tax season.

To keep life simple for yourself, I suggest that you use the information provided by your employer relating to the fair market value of the stock you received.

For you to value the stock yourself would be very expensive. If the company succeeds with its IPO and the value of the stock goes up dramatically, you will also probably be in the best position if you accept the information the company gave you.

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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