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Author: mathetes Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: ISOs: What is Basis for AMT Date: 11/26/2001 12:31 PM
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When I exercise ISOs what is the Basis for AMT purposes? The average market price (mean of high and low) on the exercise date?

What do you mean by "exercise"? Buy and Hold? or Buy and Sell? If the latter, there's no AMT involved at all.

If the former, holding for at least a year, then your intial AMT exposure is the difference between the strike price and the market price on the day of exercise. That's usually determined as the mean of the day's high and low, as you describe.

And that is the price that becomes your "AMT Basis" for use if and when you subsequently, after a year or more, get around to selling the stock. At that point, in filing your taxes, you'll fill out two Schedules D, the normal tax return showing the strike price, the AMT tax return based on the higher basis. And then you'll fill in Forms 6251 and 8801 as needed......

For more on this whole process, you'd do well to do some reading at www.fairmark.com and www.mystockoptions.com

mathetes
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