Is there a tax consequence for swapping incentive stock option shares?

October 19, 2006

Date: Tue, 03 Oct 2006
From: Bob

I had previously understood that there was no regular or AMT tax consequence from exercising ISOs by surrendering shares of the employer company (a swap).

Please confirm that this understanding was in error.



Date: Thu, 05 Oct 2006

Hello Bob,

Yes. Although there is no regular taxable income from exercising the ISO, you will have the same additional AMT income as if you paid the option price in cash.

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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