Tax News

CCH (cch.taxgroup.com) reports:

The difference between the adjusted alternative minimum tax (AMT) basis and the regular tax basis of stock received through incentive stock options (ISOs) was not a tax adjustment that was taken into account in the calculation of a married couple's alternative tax net operating loss (ATNOL) in the year the stock was sold. Furthermore, the couple's sale of stock received through the exercise of ISOs was a sale of a capital asset and, thus, did not create an ATNOL due to the restrictions of Code Sec. 172(d).
Although a taxpayer is generally not required to recognize income upon the grant or exercise of an ISO, in calculating AMT the spread between the exercise price and the fair market value of the stock on the date of exercise is treated as an item of adjustment and is included in alternative minimum taxable income (AMTI). Thus, the couple had a gain that must be included in AMTI in the year of exercise.
The taxpayers argued that the difference between the adjusted AMT basis and the regular tax basis of the stock sold was an adjustment that created an ATNOL that may be carried back to reduce their AMTI in an earlier year. Although basis of stock may be recovered under both the regular and the AMT systems, when that stock is sold at a loss, the statutory limitations on capital losses that are equally applicable to the AMT and the regular tax system must be taken into consideration. Because the applicable statutes do not provide for an adjustment to ATNOL for the difference between the adjusted AMT basis and the regular tax basis, this adjustment was not taken into account in the calculation of the ATNOL in the year the stock was sold.
E. Marcus, 129 TC No. 4, Dec. 57,053
Other References:
Code Sec. 56
CCH Reference - 2007FED ¶5210.57
CCH Reference - 2007FED ¶5210.63
Code Sec. 172
CCH Reference - 2007FED ¶12,014.4015
Tax Research Consultant
CCH Reference - TRC BUSEXP: 45,106.05
CCH Reference - TRC COMPEN: 24,054
CCH Reference - TRC FILEIND: 30,156.10

State Headlines

All States --Sales and Use Tax: SST Sourcing Group Reports; Nevada to Petition for Full Membership
The Executive Committee of the Streamlined Sales Tax (SST) Governing Board was told, during a conference call on August 15, 2007, that Nevada is about to petition for full membership on the Board. The Committee also received an update on the work of the sourcing task force, which was appointed at the Board's June meeting in Detroit. (TAXDAY, 2007/06/26, S.1) The Committee also discussed holding a Board meeting in Orlando, Florida, the week of December 10, 2007, but no final decision was reached.