Discussion:AMT adj basis cost for NQSO
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Discussion Forum Index --> Advanced Tax Questions --> AMT adj basis cost for NQSO
Discussion Forum Index --> Tax Questions --> AMT adj basis cost for NQSO
| 14 July 2008 | |
| I have a client who has both ESPP's & NQSO. It is my understanding that both are STCG/L as they were exercised and sold same day. The Adj cost basis is calc to be the exercised cost plus the ordinary income provided by Corp YE activity statement. Exercise Cost is $5k, ordinary inc is 21K and the adj basis is $26K. Everything is reported correctly on the W-2 (ie, ordinary income is calc in total compensation, the appropriate taxes were withdrawn and paid, and box 12 has the matching ordinary income from the stock sales of $159K.
My question is: #1 Are NQSO subject to AMT (I know ISO's are subject to AMT) and if so is there a cost adjustment that I have to take on Lacerte to compensate for the treatment of NQSO's? (I'm referring to the AMT Cost or other Basis entry on the Sch D for Dispositions) | |
Death&Taxes (talk|edits) said: | 14 July 2008 |
| No, no AMT adjustment needed. A common strategy with ISOs used to be, and probably still is, to disqualify enough of them by selling so that the AMT adjustment did not produce AMT. | |
| 14 July 2008 | |
| NO AMT adjustment for ISOs if purch & sold same year. No AMT adjustment for NQs either. | |
Death&Taxes (talk|edits) said: | 14 July 2008 |
| Thanks for providing a better explanation of the ISO disqualification, Kevin. | |
| 14 July 2008 | |
| Thanks much. Not exactly what my client would like to hear but that is what I suspected. Income is income. | |
| 14 July 2008 | |
| I think I am repeating what you have said...the bargain element (difference between strike price and FMV at exercise) will be reported as wages in box 1 of W-2 (at least for the non-quallies) and box 14 should have a code v for the bargain element. the sale transaction of the shares, in a cashless transaction, usually results in a small short term loss due to transaction costs.
basis is the FMV at exercise. | |
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