Subject: Forced to pay $330K in taxes, for what actually amounted to a $50K gain - ISO-AMT, punitive and no sense of fairness!! Comment: Dear esteemed Panel Members, Honorable Senator Frist, Honorable Representatives Blackburn & Tanner and all other Members of Congress. WE CALL ON YOU TO PLEASE ACT ON THIS ESPECIALLY EGREGIOUS SECTION OF THE TAX CODE AND RESTORE FAIRNESS TO YOUR CONSTITUENTS ACROSS THE COUNTRY. Below please find our testimony to the Ways & Means Oversight Tax Simplification Hearing June 2004. Statement of David McGovern Before the House Ways and Means Committee, Subcommittee on Oversight Washington, D.C. - June 2004 Briefly, I would like to share how the AMT derailed my pursuit of the American dream. In 2000, I exercised, and intended to hold some 10,000 plus Incentive stock options. In short, I was the victim of both the AMT, and a rapid decline in the price of my employer's stock (Nortel Networks). The result forced me to pay $330K in taxes, for what actually amounted to a $50K gain. When I exercised and held the stock options, the Nortel stock price exceeded $80 per share. When I finally sold it, at $20, I had a real gain of just under $50K (sales proceeds, minus original exercise cost). However, due to AMT, my tax bill was $330K. I want to repeat that – a $330K tax bill on $50K profit. This is a tough one, I think, for lawmakers to defend. A decline in stock price is a risk you take when investing in stocks, but it goes against any sense of fairness to tax someone $330K, for a $50K financial profit. Some have argued that I should have known about the AMT and planned accordingly. Although ignorance of the law is no defense, it does speak to both the complexity, and the fairness of this law when it comes to average white collar/middle class taxpayers like me. I certainly do not see any sense of fairness in the way the current AMT law is written, as this law has had a similar effect on multitudes, and forced many people into bankruptcy, and general financial ruin. Please consider changing this law for those past, present, and future Americans, who either have been, or stand to be, unnecessarily punished by this legislation. David McGovern - Nashville, TN |