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Get your taxes done using TurboTax
Hi TomYoung,
I am wondering if you can elaborate further? I own certain warrants that entitle me to purchase shares in a privately held technology company. This small enterprise has had zero stock sold at arm's length in its history, although a 409A valuation was done in July 2015 at the time an ISO program was introduced (my warrants were issued before the ISO program was introduced). In the interim, the company's business has gone sideways to down.
My warrants vested in the period from 2012 - 2017. I was dismissed from the company less than 3 month ago and would like intelligently to exercise my rights to purchase the stock before my grant expires next year. Because there is no market for the stock, I have no ability to re-sell the shares, nor to establish a fair market value for them. This puts me into an AMT quandary as far as I can determine.
Because my warrants include transfer rights and are not part of an organized ISO program, I believe they qualify as Non-Statutory Options per Publication 525. However, this document does not include an example for reporting the exercise of a non-statutory option grant under AMT when there is no FMV for company's shares on the date of exercise. The value to me in owning the shares is to participate in any eventual sale (not expected within the first year of owning the stock). I am unsure what amount to record under AMT requirements as the difference between my exercise price and the FMV. What guidance can you provide in this situation?