ExpertCPA · Question 01 · Area 1: Individual Tax
An individual taxpayer, filing single, exercised 1,000 Incentive Stock Options (ISOs) in Year 1 when the fair market value was $50 per share. The exercise price was $10 per share. The taxpayer did not sell the stock in Year 1. For regular tax purposes, no income was recognized. The taxpayer's regular taxable income is $120,000. Assuming the AMT exemption is $81,300 and the phase-out threshold is $578,150, and the taxpayer has no other AMT adjustments, what is the taxpayer's Alternative Minimum Tax (AMT) liability for Year 1 (rounded to the nearest dollar)?<br/><br/>Note: The AMT rate is 26% on the first $220,700 of the AMT base and 28% on the excess.
An individual taxpayer, filing single, exercised 1,000 Incentive Stock Options (ISOs) in Year 1 when the fair market value was $50 per share. The exercise price was $10 per share. The taxpayer did not sell the stock in Year 1. For regular tax purposes, no income was recognized. The taxpayer's regular taxable income is $120,000. Assuming the AMT exemption is $81,300 and the phase-out threshold is $578,150, and the taxpayer has no other AMT adjustments, what is the taxpayer's Alternative Minimum Tax (AMT) liability for Year 1 (rounded to the nearest dollar)?<br/><br/>Note: The AMT rate is 26% on the first $220,700 of the AMT base and 28% on the excess.
Answer options:
$0
$4,202
$20,462
$10,400
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