Subject: ISO AMT Comment: Leroy Lacy and Janis K. Purl Private Citizen Organization: Reform AMT Dear Sir/Madam: This letter is to add testimony to those given by others who are suffering from the AMT issues on incentive stock options. In my case it is devastating and has taken all that I have saved to carry me through retirement and left me in a dire position. I am a software engineer and have worked for wages all my life. I’ve been continuously employed since I was twelve years old. I’m from a large (5 boys and a girl) poor family. We lived on one income from my father as a technician. I worked my way through high school and College at various jobs to provide me with cloths and transportation and to help supplement the family income. I have been fortunate enough to work at the state of the art in computer science while at the DOE where I implemented operating systems on supercomputers. My 22 years with DOE at various facilities exempted me from FICA and when I left DOE to work in aerospace, I was quite behind my peers in acquiring Social Security credits. While at various positions in Silicon Valley where I was again working at the state of the art in networking and computer security, there was no real retirement benefits. The work was all consuming and most enjoyable and the years seemed to fly by. When I reached fifty-five, I noticed that I should work carefully to amass a nest egg to carry me through my retirement years. The point was driven home when my grandmother could no longer take care of herself and had no support to help provide comfort until she died. I was her only support as the eldest child (my mother and father died at an early age). She had nothing but Social Security and that was just not sufficient to take care of her. While I had sufficient income to allow her the care she required, it made me aware of the state of risk that I was in. I had never given the fact that I may not be ABLE to work any significant thought and at the age of fifty-five, I did not have many years left to save for a time when I may have to stop working. I took a position at Exodus Communications as an early employee for a reasonable, but not outstanding salary with stock options. It was explained that if I worked hard and the company prospered, my stock options would become valuable. I liked that idea; I have always been an over achiever. During my tenure at Exodus, I worked harder than I ever have in my life. I worked days at a time and traveled constantly. I have never worked under such stress in my life, but I build a security managed services business for Exodus that was their most profitable service. Eleven group members generated over $15 million in annual revenue. We were the highest producers in the corporation and watched over a world wide network of security services for the Exodus clientele. The five years at Exodus took a heavy toll on my and my family but we all supported each other and took pride in the fact that we were building a business that anyone could be proud of. We were counting heavily on the value of the stock options to provide us with the retirement income necessary. We built a retirement home in Colorado and purchased a nice home here in Santa Cruz County that we hoped would provide a little estate for our two children after we passed away. That was not to be; shortly after the company went public, a new set of management was brought in as part of the process of becoming a large corporation. Ellen Hancock and her staff squandered all the value that all the hardworking staff had generated and drove the company into bankruptcy in a very short time. I was not sure what had happened, but as I learned about Enron, Worldcom, and other corporate criminals, it became obvious that I too was a victim of corporate greed. When it became obvious that all the stock options I had purchased had became worthless, I was most disappointed, but we still had our two houses, an IRA, some savings and I still had a good reputation as a leading software development manager. However, that was not to be. In August, after filing two extensions, my CPA and financial advisory informed me that I had a $1.7 million dollar tax bill based on all that worthless Exodus stock. That’s just not possible, I paid over a half million dollars in taxes the year before, how could I owe another 1.7 million based on worthless stock. I can assure you that you have never experienced a shock like the one I got when the CPA informed me that I REALLY owed the State and Federal government all that money. Many times over what I had left from my time at Exodus or that I could make in my viable working years. Until that day, my biggest problem was with finding a new job to replace the income I had at Exodus. Now that I was 60 and the market was tight, no one wanted to hire me even though I’m still the best in the business. So here I am at 61 still telling myself that just CAN’T happen to me. There must be some way this is incorrect. I’ve attempted to work out settlements with the IRS and FTB and they now have all the cash and retirement savings I have accumulated during my 50 years of employment and it appears they are about to take the rest of my possessions. I never thought I’d end up as one of those you see on a street corner with a cardboard sign, but I’m not far away from that today. I’ve been looking for work for nearly a year now and living on savings which have just been taking by the IRS. There are tax leans on both houses so I can’t sell them to buy food and pay rent. There are zero balances in my bank accounts and all the monthly bills are coming due. I feel really bad for my wife who depended on me to provide us with some sort of retirement. The frustrating thing is with this job market, I can’t just say “Oh Well, I’ll just work until I die.” I can’t even find a job with sufficient income to pay medical insurance or rent. I just don’t know what I’m going to do. It’s a mess. Thanks for your attention. I do hope that some equitable changes can be made in the tax system before we lose our last remaining assets. Sincerely, Leroy Lacy |