- 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
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