ISO - Cashless Transaction
Employee exercised incentive stock option on 2,000 shares costing $27k. He did a cashless transaction whereby he sold 800 shares for $37k part of which he used to fund the purchase. From this, $5k was deducted in fed tax and $2k in state tax leaving a net of $3k. Presumably, these tax amounts are already reported on the W2. The 800 shares were reported on a 1099-B and included some shares that satisfied the holding period which are to be taxed as LTCG.
Now does it matter if the remaining 1,200 shares that the employee holds (2,000 - 800) came about in a cashless transaction when it comes to figuring AMT? The diff between the FMV on exercise date and the exercise price is $46k so normally that would be subject to AMT but not sure if it matters if it was cashless or not.