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Federal Bailout includes Alternative Minimum Tax Forgiveness


Taxpayers who owe back year federal tax liabilities for alternative minimum tax (AMT) from exercising incentive stock options (ISOs) will be relieved to learn their debts were forgiven as part of the Federal bailout legislation passed by Congress and signed by President Bush on Friday, October 3.

According to Michael Gray, CPA, who writes a monthly newsletter, Michael Gray, CPA’s Option Alert, “Many employees who exercise ISOs and hold the stock find they owe AMT. If the stock goes down in value or they can’t sell the stock because it’s not publicly traded, they might not have the cash to pay the tax. This was a widespread problem from the ”Dot Com“ crash of 2000 and 2001. Now unpaid AMT and related penalties and interest for exercises of ISOs before 2008 are foregiven.”

Michael Gray’s CPA firm helps employees with tax planning for employee stock options. You can subscribe to his free newsletter and find articles, questions and answers relating to employee stock options at his web site,



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