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AMT - ISO VICTIMS RUNNING OUT OF VENUES
February 28, 2007
Many taxpayers holding incentive stock options (ISOs) at the time of the tech-bust of 2000 ended up with a big alternative minimum tax liability on worthless stock options. They have been in court ever since trying to get a better deal. The Tax Court and circuit courts have turned down their arguments. Now they've also lost in the Court of Federal Claims, a venue not often used to fight tax cases.
The AMT plaintiff this time was Lauren Guzak, who had over $1.5 million in AMT income from ISOs. When the stock dropped the value of her ISOs by $600,000, she tried to claim it as all currently deductible. Like every other court, the Court of Claims held that the loss was a capital loss, and AMT capital losses are subject to the same $3,000 annual limit as regular losses.
Looking on the bright side, Ms. Guzak can look forward to a $3,000 annual AMT capital loss for the next 200 years. She can also use recently enacted legislation to get refunds of part of her ISO AMT liability. (UPDATE: the new law may not do her any good. See the comments).
Cite: Guzak, Court of Claims No. 05-1070T
Related: YET ANOTHER AMT-ISO VICTIM LOSES IN TAX COURT
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Comments
Funny to read about myself on your web site...
Anyway, I wanted to correct one thing you wrote: I actually won't get any refund under the recently enacted legislation. My husband and I don't qualify because of the income cap. A nice problem to have? Perhaps. But it doesn't smart any less.
Posted by: Lauren Guzak | March 2, 2007 4:04 PM
Thanks for the note!
Posted by: Joe Kristan | March 2, 2007 4:51 PM