Subject: Tennessee Family pay 70+% tax, have to liquidate (2) teenagers College fund, retirement and forced to place a 2nd Mortgage on home in order to PREPAY TAX ON MONEY THEY NEVER RECIEVED, ISO-AMT is EVIL & un-American!!! Comment: Dear Panel Members, President Bush, Secretary Snow, Senator Frist, Representative Tanner and all other Members of Congress we call on you to please right this horrendous injustice and restore our faith in this great country. Quaidy Family Testimony Before the House Committee on Ways and Means, Subcommittee on Oversight Washington, DC June 2004 My name is Greg Quaidy and I am writing on behalf of my wife Donna and our two children. We appreciate the opportunity to discuss how the unfair and outdated piece of the tax code known as the Alternative Minimum Tax has affected our family. I sincerely hope that you can be a part of the solution to what has become a devastating blow to an ever increasing number of Americans. In April 2001, my wife and I paid federal income tax of $119,541 on a taxable income of $169,731 for tax year 2000. This is an effective tax rate of 70.43% for my 2000 return due to the AMT. I do not believe that, by any measure, any hard working American would consider this fair or justified. In 1995, I went to work for a small networking company called International Network Services (INS) after nearly twenty years with Mobil Corporation. INS, like many other network services startups, relied on Incentive Stock Options (ISOs) before its initial public offering to attract and retain some of the best talent in the networking industry. It was an excellent company and it grew rapidly from the 100 of us that started to over 1,000 employees and $100 million dollars in revenue. INS was truly an American success story. In early 2000 I left INS and exercised all of my options, when Lucent acquired INS and many of us felt the merger would not be a good long term strategy. On the advice of two different financial planners, I exercised and held the stock to obtain long term capital gains treatment on any gain I received because so many of my options were from pre-IPO. My basis in some of the shares was as low as $0.50 per share. When I exercised the options the selling price for what had by that time become Lucent stock was over $54.00. This would now become my basis for AMT purposes regardless of whether I held or sold the stock at any time. By the time my one year holding period for long term capital gains had elapsed the stock had plummeted to less than $15.00. The real shock came the following April when I learned about the Alternative Minimum Tax – which I had not previously heard of. Due to the unfair, and I’m sure unintended, consequences of this antiquated tax law I was taxed on income I never made and never will. Like many others this unfair tax burden wiped out any savings we had including those set aside for college for my sixteen year old daughter and fifteen year old son. In addition I had to take out a second mortgage on my home for another $40,000. My wife and I who have both worked hard to save over the course of our lives are now scrambling to save enough to at least assist the soon to be college students. Not to mention our now non-existent retirement plans. Our story, although devastating to us, turns out to be minor in relation to others I have seen that have lost everything including their homes and who now struggle under IRS liens and bank foreclosures. I can not urge your committee strongly enough to right this issue as quickly as possible to save other innocent tax payers from having their savings wiped out and in some cases worse by this unfair and punitive tax. Greg Quaidy Germantown, TN |