incentive stock options and AMT?

Question

I bought a few incentive options from my company in 2005. Every time I asked my accountant about AMT, the answer was that because I purchased them at their fair market value at the time, I did not have to pay AMT. Now, the options are likely worth more, though the company is still private. I still don't have to pay AMT, right? I tried to read on the IRS web site, it is confusing.

Answer 1

Purchasing them a fmv at the time has nothing to do with selling them - if they have increased in value since then, the increase is capital gain when you sell. They might or might not make you subject to AMT depending on your income and other tax situation.

Answer 2

ISOs meet the IRS standards for particular tax treatment. With ISOs, usual earnings taxes are no longer due on the time of workout, however the optionee is had to hold the shares a minimum of one 3 hundred and sixty 5 days from the date of workout and 2 years from the supply date (waiting era) to obtain the favorable treatment. If the shares are offered after the waiting era, the optionee would be project to a capital advantageous factors tax (unlike earnings tax with NSOs) on the version between the sale cost and the supply cost. If the shares are offered previous to the specified waiting era, those offered shares are project to a disqualifying disposition meaning the optionee would be required to pay elementary earnings taxes usually on the version between the straightforward industry fee at workout and the supply cost. Capital advantageous factors costs will usually be assessed against the version between workout cost and straightforward industry fee at disposition.