Subject: Texas Longhorn Caught in the ISO AMT Trap & Bankrupt to Boot Comment: Nelson Allen - Individual President’s Advisory Panel on Federal Tax Reform Texas Longhorn Caught in the ISO AMT Trap & Bankrupt to Boot I am employed by Network Appliance in the Plano area of Texas. In 2000 I purchased some of my stock options During that time the stock’s purchase value was $50/shr and the peak value was $150/shr then within a few months the value dropped to a low of $6/shr. Consequently, we were taxed at $50 per share rate even though by the end of the year – the stock was only valued at $6 per share. We were told we owed AMT in the amount of $350,000. This was a prepayment of tax for which we hadn’t received benefit from. Lets remember, we purchased the asset we didn’t sell it and receive gains! Prior to all this, my wife and I had started building our retirement home and we had to finish the house using our savings rather than nonexistent gains from the stock. I then had to mortgage the house. The IRS ruled that we would have to sell our house in order to pay the AMT liability of $350K. I put the house up for sale and three months later, the IRS attached my wages because the house had not yet sold. When this did not help the house sell, the IRS attached my base salary and my bank accounts - - forcing me into bankruptcy. I have always paid my taxes on time and I have never been audited. I am 57 years old and all my savings were in the house. The house never sold and eventually was foreclosed on - eliminating any future liability for the payments, but leaving us with no equity to pay the IRS. We finally got the IRS to negotiate a settlement (after 18 months in bankruptcy) on the amount to be paid over a six-year period. I have hundreds of thousands of carry-forward losses but they cannot be used for previous years. We settled on paying the IRS $240K over six years which will take most of my income. Then, I will start to try to build our retirement savings when I'm 63 years old !! Since I was forced into bankruptcy, I don't have a credit card to travel and do my job - I can't rent a car. I use a bankcard for hotels and meals and get rides from other employees in the cities I visit. I would have paid anything I could afford from day one – the IRS didn’t have to force me into bankruptcy. This Policy & the IRS has ruined my credit, cost me thousands in legal and accounting fees (all of which could have gone to paying them). I'm at a loss as to why someone who has never done anything but pay his taxes on time can be treated in such a vindictive manner! The ISO AMT law is beyond unfair! IT’S CRIMINAL and should be changed immediately!! It has ruined my family’s retirement and has forced me into bankruptcy unnecessarily. Your support is respectfully and urgently requested so that our family and other honest taxpayers don’t get ensnared in this horrible AMT trap. Nelson R. Allen Email: rico@netapp.com Plano, TX |