Restricted Stock

[S T]

I have a client that on her W-2 form is included a Restricted Stock Award Mgmt Bonus, 158 shares, the company sold 68 shares to cover payroll taxes and withholding, and the balance of 90 shares were given to the client. Client did not sell the 90 shares.

The fmv is all reported on the W-2 form, but my question is whether not this is subject to Alternative Minumum Tax Adjustment on line 14 since there is not a same day sale?



Thanks

Sandy

[JG EA]

I have a client that on her W-2 form is included a Restricted Stock Award Mgmt Bonus, 158 shares, the company sold 68 shares to cover payroll taxes and withholding, and the balance of 90 shares were given to the client. Client did not sell the 90 shares.

The fmv is all reported on the W-2 form, but my question is whether not this is subject to Alternative Minumum Tax Adjustment on line 14 since there is not a same day sale?



Thanks

Sandy

I hate stock options and have to read about them each and every time, but....

TTB14-2

Add back to AMT the difference between the FMV and the
amount paid (unless sold during the same tax year).

[S T]

Well

I guess that is why I am confused.

They weren't sold, Client is still holding the stock.
W-2 income is the full amount of the FMV, so doesn't that become the amount paid?

Or is the amount paid -0-?

So if that is the case then no AMT adjustment even if they weren't sold?

Sandy

[DTS]

Sandy

I'm hoping someone will jump in and verify, but seems that if you hold, you report the difference of the option and fmv price as an adjustment.

D

[JG EA]

I guess that is why I am confused.

They weren't sold, Client is still holding the stock.
W-2 income is the full amount of the FMV, so doesn't that become the amount paid?

Or is the amount paid -0-?

So if that is the case then no AMT adjustment even if they weren't sold?

Sandy

Sorry missed the not sold part. I'm sure you've already looked at the 6251 instructions. But just in case:
Line 14—Exercise of Incentive Stock Options
For the regular tax, no income is recognized when an incentive stock option (ISO), as defined in section 422(b), is exercised. However, this rule does not apply for the AMT. Instead, you generally must include on line 14 the excess, if any, of:

The fair market value of the stock acquired through exercise of the option (determined without regard to any lapse restriction) when your rights in the acquired stock first become transferable or when these rights are no longer subject to a substantial risk of forfeiture, over

The amount you paid for the stock, including any amount you paid for the ISO used to acquire the stock.

[S T]

I am brain dead as in fried

JG your post, that is why I am confused, I have been reading the form 6251 instructions. I have always had same day sold, but nooo this client decided to hold the shares.

Okay here are the numbers

W2 has the restricted stock mgmt award bonus at 10,951, so that is reported as ordinary wage income.

If I look at the Restricted Stock sheet that employer gives - there is no option price it is -0-

So tax payers cost basis is the 10,951 and they are holding the balance of the 90 shares and have not sold them. Transaction on W-2 form for 2008.

Is AMT adjustment -0-
Or is AMT adjustment the 10,951

JG, thanks for hanging in here with me.

Sandy

[JCH]

If the 90 shs you say the client exercised are statutory options, and they did not sell these in 2008, then there is an AMT adjustment. See Code Sec. 56(b)(3)

[JG EA]

__________________
OK so JCH helped here by saying there is an AMT adjustment. So, the adjustment is FMV over amount paid for the stock. Right? If that number is the same then no adjustment?

[JCH]

yes, that's correct JG. AMTI is increased by FMV minus the exercise price.

[S T]

I have 2 more like this

There is no spread, as it was a Mgmt Award and it is noted as a Restricted Stock Lapse, at the full FMV (same as trade amount) on date exercised, the Employer just gave the shares as a form of compensation. So no AMT, as far as I can see, thank goodness.

So thank you both JG and JCH,

I now have a lot of "bookmarks" on my Favorites for Restricted Stock Awards.

Sandy