I Wish That Hadn't Worked--Section 83(b) Election Regret

Ed Zollars' Tax Update Podcast

This podcast is the sequel to a November 2006 podcast on the same case--that of Kadillak v. Commissioner where an individual who was caught by the "dot bomb" crash of the technology stock of his former employer attempted to mitigate the damage caused by his ISO exercise and 83(b) election made at the height of the craze. A year later, Mr. Kadillak was no longer employed by the organization, the stock price had tanked, and when he sold the stock that he didn't have to surrender got stuck with a $3,000 per year AMT capital loss deduction (probably for lifetime) to "offset" a large prior year AMT liability.This week the Ninth Circuit ruled on the case and, unfortunately for Mr. Kadillak, agreed with the Tax Court's decision. We look at the Section 83(b) election, it's downside risk that Mr. Kadillak obtained "up close and personal" experience with and some general observations on counseling clients about the "what if" problem when they are sure they know what the future will hold.The materials are available at http://www.edzollars.com/2008-08-04_83b.pdf .The podcast is sponsored by Leimberg Information Services, located on the web at http://www.leimbergservices.com .