Subject: Devastating Impact of AMT from ISO's Comment: I am a sales manager in Illinois and work for a high tech company in Sunnyvale, CA. , Network Applaince. I have paid my federal and state taxes every year since the age of 16 until 2000 & 2001 when AMT took over my families life. I obtained both a blessing and a curse when Network Appliance stock options became valuable and eligible to exercise. I followed expert guidance on tax issues in regards to ISO options and exercised and held all vested ISO options in 2000 & early 2001. The market collapsed, the AMT tax bill came due and subsequent loan cover calls collapsed any value left from the options. These events created a $900,000 tax liability with no shares or share value left to pay the tax bills of 2000 and 2001. The tax bill was more than my family is worth by a factor of three. We are on a payment plan with the IRS but it does not allow us to cover monthly bills eight of the 12 months a year. It has put a tremendous emotional strain on our family, especially my wife. From her perspective we were taxed on something we never had. We have paid our taxes every year after and expect to for the rest of our lives. The AMT ISO tax laws should have been written to treat vested ISO options as standard common stock with standard short term or long term capital gains to be applied based on vesting periods. If the law had been written that way in 2000 and 2001, we would have paid 5X the amount in taxes to the IRS and the state of Illinois. Our family would also have had several millions to both invest as well as contribute to various charities. The US treasury, the economy, several charities, and my family would all in better shape if the tax laws were written in better balance with today's stock option equity employment siutation. |