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Level 1
posted Nov 6, 2020 4:33:20 PM

Can I Exercise Half of the ISO to avoid AMT?

Hi Tax Geek,

I know there is a tax exemption threshold for AMT each year, $71,700(2019). Let say I just want to exercise half of the option, which is under $71,700 (FMV - Strike) x Stock Options Exercise in 2020. Will I get hit by AMT tax? Are there other factors that I need to consider?

 

Thanks

Reece

0 2 872
2 Replies
Level 15
Nov 6, 2020 4:46:48 PM

https://www.danielzajac.com/4-ways-to-lower-your-alternative-minimum-tax-liability-with-incentive-stock-options/

Not applicable
Nov 6, 2020 8:35:53 PM

can you exercise only half!  ask your employer

 

1) do you have other items that could be treated as preference items creating AMT income.

2) other things to watch out for

 

• If you are filing Form 2555, see instructions for the amount to enter.
• If you reported capital gain distributions directly on Form 1040 or 1040-SR, line 6; you reported qualified dividends on Form 1040 or 1040-SR, line 3a; or you had a gain on both lines 15 and 16 of Schedule D (Form 1040 or 1040-SR) (as refigured for the AMT, if necessary), complete Part III (form 6251)on the back and enter the amount from line 40 here.

 

 

review form 6251 to see if you might be subject to AMT even if the tax preference  from the exercise is less than  $71,700

https://www.irs.gov/pub/irs-pdf/f6251.pdf