Subject: AMT forces liquidation of Stock Comment: Back in 1986, I was part owner in a small company that was acquired by a larger company. I subsequently was employed by that company (I continue to be employed by them to this day). As part of my compensation for employment by the company, I requested stock options in lieu of a portion of my salary at the then computed value of the parent company stock. Approximately, ten years later, the parent company went public, and during that year, my options were set to expire unless I exercised them. I accordingly did exercise them. This of course triggered the AMT tax. The amount of the AMT tax due was such that I was forced to sell approximately 80% of my stock in order to satisfy my AMT liability. This of course meant that I was no longer able to maintain my original interest in the parent corporation as an owner. I was lucky in that I was able to meet the obligation by taking this alternative, but to say that this was stifling to the entreprenureal spirit of this country is an understatement. Ten years of investment and perseverence wiped out by a law originally intended to prevent the top executives from escaping their tax responsibilities. My salary at the time was less than $70,000 per year. It was a good salary, but not what I would consider the original target of this law. Thank you. |