Your client just exercised some stock she received from an ISO. She wants to keep the stock
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 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. |
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta