Question: Your client just exercised some stock she received from an ISO. She wants to keep the stock because it has long-term appreciation potential. Which one

Your client just exercised some stock she received from an ISO. She wants to keep the stock because it has long-term appreciation potential. Which one is the correct statement to make concerning the fact that she will be taxed on these exercises under the AMT method?

A.

View the incremental tax that is paid for these exercises as a loan to the Government which will eventually be paid back.

B.

Exercising the ISOs and keeping the stock will create an AMT credit which can be used anytime.

C.

This is an example of an AMT exclusion and it will lead to a permanent tax increase.

D.

The exercise of an ISO will be taxable for both tax methods - regular and AMT.

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