Posted: May 09, 2005 By: Susan Timmons

Subject: Reform ATM (ISO)

Comment: In regards to the changed in the current ISO stock option AMT...

I purchased a bunch of stock options from my company in 2000, I was pregnant and planning on leaving so I was trying to own them and hold on to them rather than having to sell off all the options and pay the short term capital gains.

I did not pay much for the options, I had held onto to them for years, I was going on my 9th year of employment.

That next April 15th, my accountant gave me the news that I owed almost $75,000 in taxes!! As you all know the stock market fell pretty heavy in 2000, so by this time, I was paying taxes in excess of what the stock was even worth. How ridiculous is that?

Bottom line is that we had to use our home equity loan to pay our taxes that year. Luckily my husband and I both make decent money, but I can't imagine if I was someone who scraped the cash together to try to avoid the short term capital gains and then got that kind of news on tax day.

It took us until this tax year of 2004 to recooperate all of the money that we had to needlessly pay for stock that we ended up selling for next to nothing just to get the AMT back, not to make much of a profit on the sale.

No one is going to have much pity on us since we do earn over $100K a year, but that is the only reason that we have been able to get our money back so quickly (relatively speaking).

If we were making $40K a year, like many of the families who had to go into bankruptcy because of this law, it would take us decades to get back all the needless taxes that were paid.

The laws need to be changed, I understand why they were put into place, but the times have changed, instead of taxing the rich it bankrupted the middle class.

Thank you for your attention to this matter.

Susan Timmons
Stay at home Mom of 4 little boys...
trying to make this a better place for them