Subject: ISO/AMT Comment: First and foremost, I believe that the Alternative Minimum Tax should be reformed or eliminated, especially with respect to incentive stock options. I am one of countless people affected by the AMT on the phantom gains from employee stock options. Because of poor planning and advice, and some bad judgement on my part, I paid roughly 110% of my year 2000 gross income in taxes because of phantom gains on options I exercised in 1999 and 2000. I was thankfully able to meet all of my legal reporting obligations to the IRS and pay the tax immediately. However, five years later the government still has over $100,000 of my money which it holds as a "credit" that, under current law, I will never see again. I consider myself lucky to have been able to avoid bankruptcy or an ugly entanglement with the IRS. Other taxpayers have clearly been less lucky. This is clearly an unjust result. While I firmly believe that taxes are the price we pay for living in a civilized society, and I believe in following the law, I do not believe that it is appropriate for any individual to pay over 100% of their actual income in any given year, nor is it reasonable for the government to arrange the rules so as to make it nearly impossible for middle-class people with limited capital assets to recoup their overpayment. To add to the insult, the voluntary nature of the reporting of ISO gains punishes honesty and rewards cheating. I hope the panel will recommend action on this issue to correct both aspects of the problem - the unreasonable requirement of paying the full tax on incentive stock option gains in the year they are exercised, and the unfair rules that allow the government to retain the overpayment indefinitely. |