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dushyant-mitra
New Member

Can I speak to a CPA before the end of the year to get advice on how to best exercise by ISO stock options in order to maximize returns / reduce & AMT taxes long term?

 
2 Replies
xmasbaby0
Level 15

Can I speak to a CPA before the end of the year to get advice on how to best exercise by ISO stock options in order to maximize returns / reduce & AMT taxes long term?

Have you purchased TurboTax Live for your 2019 return?

 

https://turbotax.intuit.com/personal-taxes/online/

 

 

https://ttlc.intuit.com/questions/4124827-how-do-i-connect-with-a-tax-expert-in-turbotax-live

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
TomYoung
Level 13

Can I speak to a CPA before the end of the year to get advice on how to best exercise by ISO stock options in order to maximize returns / reduce & AMT taxes long term?

A CPA certainly should be able to explain the tax consequences of exercising but I can't see how an "over the phone" consult could get very specific as to strategy.  Ideally you'd try all sorts of combinations of things: exercise and sell before the end of the year, exercise and sell X amount of the stock and hold the remainder (Y) through the end of the year, exercise next year because you expect your tax rate to be lower (maybe) or higher (maybe), etc.  You certainly can do some of thes exercises on your own, particularly if you're using a desktop product where you can generate as many tax files as you wish and the product has a built-in "What if" worksheet.

 

Given the tax law changes that took effect in 2018, it's less likely than before that an ISO exercise and hold strategy will get you into having to pay AMT, though it's still possible, of course.

 

The 1st great unknown here is "what will the stock do, market-wise, over the coming years?"  Even if exercising and holding the stock did get you into the AMT, if the stock price appreciates 4,000% over the next 10 years - several stocks have done just that in the current bull market - then the best "strategy" would be to exercise and hold every single share and laugh all the way to the bank.  

 

The 2nd unknown is your own appetite for risk.   Exercising and holding all the stock has the potential for great rewards, but if the stock crashes and burns you'll have nothing, and possibly paid a boatload of AMT in addition.  Exercising and immediately selling immediately gives you no upside potential, but carries no risk.  And of course there's all those "in between" strategies of exercising some, exercising all, selling some, exercising next year, etc. 

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