If you received and exercised stock options, and had to pay taxes on the phantom income, I have got some good news for you:
Buried in the $700b TARP Bailout is this AMT tax amendment:
“Their tax nightmare was created by a provision of the Internal Revenue Code called the Alternative Minimum Tax, or AMT. These tech workers had been granted what’s called an incentive stock option. Under the AMT, these are taxed at the time employees exercise the right to buy them, based on the difference between the grant price and the exercise price. During the dot-com era, when stock prices soared to dizzying heights, employees could have a stock option that was granted at less than a dollar but that he or she exercised at more than $100 a share.”
Granted, this applies to a relatively small pool of employees nationwide — those people who benefit recieve some form of compensation in the form of stock options.
We shall assume that some measure of relief will find its way to the various Wall Street denizens of Bear Stearns, Lehman Brothers, and anyone else who paid income tax on exercised stock that is now worthless — or worth far less — than the excercise price. Granted, this is only a small measure of comfort via the AMT modification, but it may rescue some out of work people lots of money they never should have paid in the first place.
Why this is in the bailout plan, I have no idea . . .
Hat tip: GMSV
Guide to ISO-AMT in HR 1424
Rescue bill offers relief to some valley taxpayers hit with the AMT
Mercury News 11/10/2008 06:36:48 PM PST
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