- 7 -
entitled to ATNOL deductions under section 56(d) and is allowed a
2-year carryback of those ATNOLs.
The Court issued a Memorandum Opinion on July 20, 2005,
ruling on the cross-motions for partial summary judgment. See
Merlo v. Commissioner, T.C. Memo. 2005-178. The Court held that
petitioner’s rights to his shares of Exodus stock were not
subject to a substantial risk of forfeiture. The Court further
held that genuine issues of material facts existed as to whether
petitioner was entitled to carry back an ATNOL deduction under
section 56(d). Accordingly, the Court issued an order on July
26, 2005, granting respondent’s motion and denying petitioner’s
cross-motion.
Discussion
The issues in the instant case revolve around petitioner’s
exercise of ISOs to acquire shares of Exodus stock in 2000, and
the impact, if any, the worthlessness of those shares in 2001 has
on the calculation of petitioner’s AMTI in 2000.
A. The Alternative Minimum Tax and Its Impact on the Exercise
of Incentive Stock Options
Generally, under section 421(a), a taxpayer is allowed to
defer regular tax on income resulting from the exercise of ISOs
until the taxpayer later sells the stock. However, ISOs are
treated differently in calculating the taxpayer’s AMTI and AMT
liability. See secs. 55(b)(2), 56(b)(3).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011