Sec. 83(b) election can be made for AMT purposes on ISO exercise.For the first time, the Service, in an information letter (INFO 2001-0224), publicly agreed that a Sec. 83(b) election can be made for alternative minimum tax (AMT See vPro. ) purposes on the exercise of an incentive stock option (ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. ). The letter further indicated that a Sec. 83(b) election may be made only for AMT purposes. The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. also concluded that it would deny an individual's request for revocation The recall of some power or authority that has been granted. Revocation by the act of a party is intentional and voluntary, such as when a person cancels a Power of Attorney that he has given or a will that he has written. of his Sec. 83(b) election if a letter ruling request were submitted. In the facts of the letter, the individual had exercised his ISOs early, believing that the early exercise and the Sec. 83(b) election had to be done as a single transaction. The individual received information from his company and consulted with an accountant; however, in deciding to make the election and exercise his stock options, he never considered the possibility that he might be terminated before vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: . The Service noted that, for AMT purposes, a Sec. 83(b) election may be made for substantially nonvested ISO stock, and can be revoked only with the IRS's consent. The Service will grant consent only when there is a mistake of fact as to the underlying transaction. Because the individual's election was not based on a mistake of fact, the IRS concluded that if it formally ruled on his request for revocation of his Sec. 83(b) election, it would be denied. Although this appears to be the first time the Service publicly stated that an individual could make a Sec. 83(b) election for AMT purposes on the exercise of an ISO, practitioners have taken that position for years. The instructions to Form 6251, Alternative Minimum Tax--Individuals, also appear to support this position. It now seems clear that practitioners will have the IRS's support as well. Note: The information letter also indicates the Service's view that a Sec. 83(b) election cannot be made for regular tax purposes on the exercise of an ISO. The letter points to the statutory language of Sec. 83, which specifically provides that the exercise of an ISO is not subject to Sec. 83. FROM ELIZABETH Elizabeth, sister of King Louis XVI of France Elizabeth, 1764–94, sister of King Louis XVI of France, known as Madame Elizabeth. Deeply loyal to her brother, she remained in France during the French Revolution, suffered imprisonment, and was BUCHBINDER,WASHINGTON Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , DC |
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