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To: maceng2 who wrote (94275)	4/15/2001 10:16:50 AM
From: Mike M2	Read Replies (3) \| Respond to of 436258

Pearly, they do not deserve a break. The tech employees benefitted from the gains but now want to share the losses ? The public has suffered big losses in their tech stocks as well. I could see waiving penalties and interest with ample time to pay but the tax should be paid. Mike

To: maceng2 who wrote (94275)	4/15/2001 11:52:32 AM
From: benwood	Read Replies (1) \| Respond to of 436258

Some of these may be from selling and not saving the taxable portion; others, however, are much more insidious -- they exorcised the options cheaply and had a huge paper profit, but held the stock. The stock ground down, they held to Jan 1st, and were then bitten by the Alternative Minimum Tax. That is, tax on the paper profit they would have had if they had bought/sold the same day as when they exorcised the options. In one article in the Seattle Times, they talked with a woman whose stock is worth about $150k but she owes tax on that stock to the tune of $350k. I can see some sense in why the AMT applies -- it forces employees to pay tax on income that arrives by stock options that year to effectively prevent people from working entirely tax deferred, etc. However, this does seem to be a legitimate gripe of a glitch in the system. Although I do believe it is up to the individual to figure out what the implications are of exorcising the stocks, I still find it peculiar that you can be taxed on paper profits that are never realized and perhaps never can be. The odd part is that if this woman sold in late December, she'd have a realized a moderately loss to deduct from her income (offsetting all her previous paper profits and then some); since she held, she has an enormous paper profit to report. Business & Technology : Monday, April 02, 2001 Last year's nouveau riche this year face financial ruin By Mark Schwanhausser Knight Ridder Newspapers For Angela Hartley, stock options offered the chance to quit a job that ate 60 hours a week, spend more time with her 7-year-old and bank a retirement stash. Options were going to change her life. They did - but not as she'd expected. Just weeks before the April 16 deadline, the 48-year-old single mother owes about $350,000 in income tax on the options she exercised, and her stock is now worth half that sum. Even if she had sold all the stock and drained her 401(k) account and the equity in her 1,600-square-foot suburban home in San Diego, Hartley would still need to find another $175,000 or so. She worries that she has little choice but to set up an installment plan with the Internal Revenue Service and pray her stock recovers in time to make payments. Hartley and countless others who exercised incentive options to buy stock during the market's upswing have been caught in the downswing by the Alternative Minimum Tax (ATM) - a tax created to ensure the "rich" pay their fair share. "I don't know if I could lose my house over this," Hartley says. "I'm a single mom, and the idea of going destitute over this - I can't imagine that was the intent" of Congress when it created the Alternative Minimum Tax. More at this link, if it works... archives.seattletimes.nwsource.com

To: maceng2 who wrote (94275)	4/15/2001 12:36:38 PM
From: Ilaine	Read Replies (1) \| Respond to of 436258

The Alternative Minimum Tax (AMT) is a real horror show if you have never dealt with it before - middle income people who hit it rich one year out of their entire lives get whacked so hard you wouldn't believe it. Been there, done that, still can't believe it. Once upon a time, not too long ago, you could average your income if you worked for years on something and got paid all at once in one year. Not no more. All your deductions phase out, too. It's ugly.-ng- As a self-employed person, I was able to cushion the blow a little by setting up a Keogh plan and buying very nice furniture for my office - but if you work for someone else, you're going to owe Uncle Sam almost 50% of the gross. And these guys who exercised the options but didn't sell the stock don't have the wherewithal to pay the bill now that their stocks have crashed. Beyond ugly - fugly. And you can't go bankrupt on Uncle Sam.