Incentive Stock Option AMT Cushion Forecaster

Estimate tentative alternative minimum tax from your planned ISO exercise, compare it with your regular tax bill, and confirm whether your earmarked cash covers the exposure or if you need to stage disqualifying sales, quarterly estimates, or short-term financing.

Aggregate spread between strike and fair market value for all ISO shares you’ll exercise this tax year.
Enter the IRS AMT exemption for your filing status after applying any phaseout calculations.
Total federal income tax calculated under the regular system before AMT adjustments or credits.
Cash or high-liquidity reserves earmarked to cover incremental AMT this filing season.
Defaults to 28%. Override if you model a blended 26%/28% federal rate or layer in state AMT exposure.

Educational planning tool only. Work with a qualified tax professional before exercising incentive stock options or submitting AMT payments.

Examples

  • Bargain element $320,000, exemption $126,500, regular tax $45,000, cash $60,000 ⇒ Tentative base $193,500.00, AMT liability $54,180.00, additional AMT $9,180.00, cash surplus $50,820.00, coverage 6.54×.
  • Bargain element $500,000, exemption $126,500, regular tax $62,000, cash $30,000, AMT rate 26% ⇒ Tentative base $373,500.00, AMT liability $97,110.00, additional AMT $35,110.00, cash gap -$5,110.00 (shortfall $5,110.00), coverage 0.85×.

FAQ

How do I factor in ISO dispositions that happen later in the year?

Estimate the ordinary income from those disqualifying sales and subtract that amount from the bargain element input so the calculator only models ISO shares you still hold at year-end.

Can I include AMT credit carryforwards in this model?

Yes. Subtract the credit you plan to claim from the regular tax field so the calculator reports the remaining AMT still payable in cash.

Does the tool handle ISO exercises spread over multiple quarters?

Combine the bargain element from all exercises in the tax year and refresh the cash reserve after each tranche so you can monitor liquidity before filing Form 6251.

What if my regular tax already exceeds the tentative AMT?

The calculator shows zero additional AMT when regular tax exceeds tentative AMT, signaling the ISO exercise remains under the standard tax regime and no extra reserve is needed.

Additional Information

  • Tentative AMT base subtracts the exemption from your ISO bargain element; reduce the bargain element input if you expect phaseouts so the model mirrors Form 6251 lines 2–6.
  • Optional AMT rate defaults to 28% but can reflect a blended 26%/28% rate, state AMT overlays, or credit offsets when you know your effective percentage.
  • Cash coverage ratio compares additional AMT due with liquid reserves so you can decide whether to accelerate a disqualifying sale or schedule estimated tax transfers.
  • Outputs model federal AMT only; incorporate state exposure by increasing the rate input or adding state AMT to the regular tax field.

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