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I must exercise approx. $100k in company stock options in the 1Q19 as they are expiring. My estimated 2019 income is $235k. Any advice on minimizing AMT tax of 28% on the est. $175k in profit when I exercise these options.

Thank you

  • Is the stock publicly traded ? – Hilmar Jun 25 '18 at 15:54
  • You estimate your 2019 income at $235k, but you're asking anonymous people on the internet how to minimize AMT? Why are you not seeking the advice of one, or more, competent tax professionals in your local area, who will be able to account for federal, state, and local issues while having a much more extensive understanding of the details of your personal situation? – Makyen Jun 25 '18 at 20:39
  • @Makyen : that's easier said that done. I found that most tax professionals are not great with AMT & Stock options (putting it charitably). It's difficult to assess whether someone knows this stuff unless you know a fair bit about this stuff yourself. – Hilmar Jun 26 '18 at 15:06
  • Makyen - I do have a tax consultant and but he admits the AMT is detailed and confusing. Asking input from others on basic numbers may provide some insight not provided by my tax guy. – Slice235 Jun 27 '18 at 0:07
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CAVEAT: I'm not a tax professional or pretend to be one. AMT is really complicated and you may be best of working with a professional

If the stock is tradable, it's probably your best bet to sell it right away and pay regular income tax on it.

Your numbers put you right smack into the AMT phase-out area, where the incremental AMT rate is a whopping 35%. So regular income tax may not be that much worse and it's a whole lot safer and straight forward. If you exercise and hold you may be able to leverage long term capital gains tax down the road, but that turns your pre-paid AMT only into AMT Credit and not into a tax refund, so you may or may not be able to recover this.

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