Your client, William Warrant, was hired for a management position at an Internet company planning to start a website called “indulgedanimals.com†for dogs, cats, and other pets. When he was hired, William was given an incentive stock option (ISO) worth $500,000, which he exercised during the year. Exercise of the ISO creates a tax preference item for alternative minimum tax (AMT) and causes him to have to pay substantial additional tax when combined with his other tax items for the year. He is livid about the extra tax and refuses to file the AMT Form 6251 with his tax return because the AMT tax is “unfair†and “un-American†according to him. Would you sign this tax return?
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