$310K startup payout trigger AMT?

[c.e.warner]

Hey FIRE community, need some urgent tax guidance as I transition fully into semi-retirement (just doing mostly real estate now).

I have stock from my old private company, CA-based. The company is being acquired in March 2026.

Excercise Date: 2.5 years ago
Price Paid: $700
Cash Out Value (Mar 2026): $310,000
2026 Taxable Income: $7,000

With my low regular income, I'm hoping for the 0%/15% Long-Term Capital Gains rate. But my major concern is, will this gain be taxed as LTCG or hit by the Alternative Minimum Tax?

If they were ISOs, could the "bargain element" from the exercise 2.5 years ago trigger a big AMT bill in 2026, even with the sale? If NSOs, I believe the capital gains portion and tax will be lower, correct?

Any experience with a private company stock option buyout in a low-income year? Recommendations on immediate steps or tax modeling before the March closing would be greatly appreciated. Thanks!

 

[Ir1sh6uck]

If they were ISOs, could the "bargain element" from the exercise 2.5 years ago trigger a big AMT bill in 2026, even with the sale?

you know, the real AMT trigger for ISOs is usually the exercise date (2.5 years ago). If you did not sell the stock in the same calendar year you exercised, you likely paid AMT then, and now you are owed an AMT Credit.
Your focus should be on how much AMT credit you can use to offset your 2026 tax bill, not on triggering new AMT.

 

[MrSam]

The AMT bargain element is usually triggered the year you exercise, not when you sell, so if you didn’t pay AMT back then, there could be a hit, but with low income, it might be minimal. For NSOs, the spread at exercise is taxed as ordinary income, and any gain after that is LTCG