Can I avoid AMT if I can’t sell my stock for a year?

June 23, 2004

Subject: Question regarding stock options
Date: Thu, 22 Apr 2004
From: Steve

I have an ISO for 100,000 shares at 25¢ per share in a public company, traded on the Pink Sheets. The current value of the stock is about $7 per share. If I exercise my options, I will be issued restricted stock and must hold it for one year before I can sell it. Can I avoid the AMT until the restrictions lapse?


Date: Fri, 28 May 2004

Hello Steve,

No. See “If stock is not transferable, do I still owe AMT?”. Also, according to Internal Revenue Code Section 83(b)(a), no adjustment to value is allowed for a restriction other than a restriction, which by its terms will never lapse.

Good luck!

Mike Gray

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