Chuck Grassley: “Today Senator Kerry and I introduced bipartisan legislation that will provide some relief to those workers who are…”

“Today Senator Kerry and I introduced bipartisan legislation that will provide some relief to those workers who are facing a massive tax bill on the phantom income they have from incentive stock options. Because it is important that my colleagues understand the unfairness of this matter, let me provide a very brief background. Incentive stock options (ISO) are an option given by an employer to an employee to purchase stock at a certain price. An individual does not recognize any income on the grant of the option or exercise thereof if the individual holds the shares for more than 2 years after grant and 1 year after exercise. If the holding period requirements are satisfied, the employee is taxed on the excess of the sale price over the exercise price on his disposition of the shares. The reason these employees have such a significant tax bill is due to the workings of the Tax Code's answer to Rube Goldberg, the Alternative Minimum Tax (AMT).”