Posted: Jun 15, 2005 By: Wade Hines

Subject: Hardship Story AMT and ISO

Comment: My story is simple. We were taxed on money we never had and never will have.

When changing to a new job in the fall of 2000 my wife had to excercise the options from her old job. We decided to hold the stock which is consistent with the intent of the ISO programs.

By tax time, we found we owed 26% of the gain we would have had if we had sold it instead of kept it. By this time the stock was worth a fraction of what it was when we excercised the option.

We no longer had close to a million in paper wealth but we had over a quarter million due in taxes: money we did not have.

This money is effectively on loan to the government should we ever owe it on actual capitol gains but they won't be on the shares that triggered the AMT tax, we had to sell those for a fraction of the value we were taxed on.


We were taxed on money we never had and never will have. That is fundamentally unfair.