Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: jbn3 who wrote (2105)	4/1/1999 7:51:00 AM
From: Maywood	Read Replies (3) of 5810

Does anyone know how the AMT works in conjunction with the long term capital gains rate? If the gain is high enough, might you end up paying the AMT rate of 26% on part of it or will you pay only 20% on an unlimited amount of gains? For example, say you are lucky enough to receive employee stock options in a company that will be going public at a later date. Suppose you exercises the options such that a portion of them are held for more than a year so that when the company goes public, some shares can be sold and the long term capital gains rate of 20% will apply. Suppose this results in a sizable gain, say $300,000. Will this entire amount of gain be taxed at only 20%, or will you end up paying AMT tax on part of it such that some is taxed at 26% (the AMT rate). I've looked at Part IV of the AMT form 6251, to try to figure this out, but as usual with any IRS form, it's not exactly straight forward. I suppose I'll have to fill out some "pretend" forms to work through the math and figure out what the end result would be.

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