So I have some ISO stock options (yeah) and three kids in college (boo) so I'm trying figure out the best tax strategy. I was hoping someone help me through the following scenario
Strike Price: $10, 2014 exercise price: $20, 2015 price: $25, 2016 price $30
Lets' assume that all of this happens 2+ years after the grant date and that my "normal" tax bill is right on the brink of the AMT threshold, that the AMT tax rate is 28% and the long term capital gains tax is 15%.
Now I want to run the following scenario
2014: exercise 1000 options 2015: exercise 1000 options, sell the previous years' option after "one year and one day" 2016: sell the 2015 options after "one year and a day"
Tax wise that would look like this
2014: AMT on $10000 of bargain element so $2800 AMT 2015: AMT on $15000 bargain element $4200, long term gain tax on $15000 = $2250 2016: long term gain tax on $20000 = $3000
What's the overall tax liability in each year? I can't figure out how the AMT carries forward when the options are finally sold.
Any good pointers to modeling software, spreadsheets or decent papers would also be appreciated.