Statement of Kelly Baird

How would you like to pay taxes on money you never had?  The AMT is forcing US citizens to pay taxes on a losing lottery ticket.  Here is my story…

In 1998, I joined a start up company, Ariba, Inc.  I was offered Incentive Stock Options (ISO) as was every other employee at Ariba.  I exercised 25,000 unvested shares of my ISO on Oct. 10, 2000.  I would not vest (i.e. I did not own and I did not have the ability to sell) those options until Oct. 10, 2001.  On April 16, 2001, I was forced to pay $1,000,000 in AMT) because I purchased those options.  Those options are now worth $100,000 or 10% of my AMT bill.  I yet to see one dollar of profit from any of those shares.

I have lost my families’ savings.  I am on the verge of losing my home that my husband and I have worked so hard to keep.  My economic freedom has been ripped from me just because I purchased a losing “lottery ticket” called stock options.  Worst of all because of my actions, I have made my husband and my 2 children suffer for my lottery ticket purchase.  

 If I had won the lottery or had sold my stock options, I would gladly pay my fair share of taxes based on the lottery ticket winnings or sales price of the stock.   But, that is not how the AMT works.  Instead you still have to pay taxes even on your losing lottery ticket and money you never made.How can we live in a country that holds freedom to close to our hearts and yet taxes middle class, law abiding, and tax paying families for earnings we never had? 

The AMT was never designed to tax middle class families like mine in such a cruel and unfair manner. The AMT is a complex set of tax laws originally passed in 1969 designed to address a small group of super-wealthy individuals who were hiding their wealth from the IRS in the form of illiquid assets.   I am not a “super-wealthy individual.”  My name is not Rockefeller, Vanderbilt, Kennedy, Gates or Ellison.  Why have I been subject to AMT if I am not a “super-wealthy” person and never saw ANY earnings for the AMT taxes I had to pay?

In addition, since the inception of AMT in 1969 it has never been adjusted for inflation.  If the AMT had been adjusted for inflation, my family would have never been forced into this situation.  Why has my family been punished because of a major inflation adjustment oversight? 

 The AMT must be reformed in order to bring it back to its original intent – ensure the super-wealthy pay their fair share of taxes and to ensure that you pay taxes on your actual earnings.