Posted: May 11, 2005 By: Don Yenish

Subject: ISO - AMT treatment

Comment: Thank you for allowing me to express my thoughts to the tax reform panel. The following comments focus on the current handling of Incentive Stock Options within the Alternative Minimum Tax code.

1) The tax code is extremely confusing, such that tax professionals can't even understand it. Once it became apparent that my wife and I were going to encounter a heavy tax burden due to AMT and it's handling of ISO activity; every financial move we intended to make thereafter, required that we consult a tax accountant and financial advisor to discuss the impact. Even after much research, the accountant felt obligated to prefaced every piece of advice by noting that much of the AMT code was poorly worded and left open for interpretation.

2) While we hope to live long enough to recover the AMT credits we have acquired, statistics indicate we probably won't. If we do not, it seems logical to suggest that our heirs should receive access to the unused credits; but, that's not currently allowed. It's money that we paid in anticipation of earnings on ISO stock (as per the AMT code) which did not materialize. Therefore, it is money we are owed, but from the current interpretations of the AMT code, it becomes the government’s property upon our demise.

3) We had to scrimp and struggle, doing everything possible, to pay what we owe on time or we would have incurred late penalties and interest charges. In contrast, the government is allowed to take years to pay back what it owes to us and it's not going to pay any interest.

Congress should change the law to address these problems. Ideally, do away with the AMT – even the professionals do not understand it. If it's deemed that a full repeal is too expensive, please find a way to repay AMT credits sooner and allow them to pass to a taxpayer’s heirs.

Thank you for accepting these comments for your consideration.

Donald and Marlene Yenish
Stacy, Minnesota