Not that I ever watch reality TV shows, but I can't help wondering: if Christina wanted Jen off the show so badly, why didn't she nominate Jen and herself? Or Jen and Corey? She could have forced Gordon's hand.

If life were Hollywood, I'd be typecast as The Guy Who Understands AMT As It Applies To Your Company's Stock Options. I get asked certain questions often enough that it's time to write up my answers. But remember, I'm not a tax lawyer or accountant; I just play one in movies. So get real tax advice from a professional.

Two questions are popular. First: "I just joined a company and got some stock options. There's something in the agreement about early-exercising. I understand how options work, but I don't understand why anyone would exercise early. What's the deal?" Second: "Oh boy, we're going public in six months, and the lockup expires 6 months after that! Should I exercise my options now to get the long-term capital gain rate on my zillions in profits?"

There are two considerations when you exercise ISOs (Incentive Stock Options): capital gains, and alternative minimum tax.

If you sell an asset more than a year after you acquired it, you're federally taxed on the profit at 15%. Less than that and it's the same as your ordinary income tax rate, which is probably 28%. So if you exercise your options, that means you buy the underlying stock, and that starts the cap gains period running, and you might cut your federal tax on the profits in half. Note that there are some funny rules for ISOs that effectively change this period for early-exercised stock to two years; either way, it's beneficial from the cap gains perspective to exercise as early as possible.

However, AMT can really screw you over. AMT is like an alternate universe that's even weirder than the normally taxed universe. You're potentially taxed on imaginary income, for example. In our case, the imaginary income is the difference between so-called fair market value of your stock on the day you exercise, and if that amount is large, you have to pay AMT on it, even if your stock ends up worthless by the time you're actually able to sell it.

Here's an example.

• On 1 Jan 2008 Joe gets 10,000 options of ABC Corp. at strike price of 5 cents.
• On 1 Jan 2010, ABC files for IPO for the coming month of June. The Board of Directors determines FMV of ABC is $75/share.
• On 2 Jan 2010, Joe is very excited about the upcoming IPO, so he exercises his options, writing a check for $500 (10,000 x 5 cents).
• On 1 Jun 2010, ABC goes public at $100. After an accounting scandal, the stock tanks. Joe ends up selling his shares for $1 each, or $10,000 total, the day the employee lockup expires. Joe's bummed out because he was briefly a millionaire, but still happy because he made a profit of $9,500.
• On 1 Apr 2011, Joe's accountant determines that Joe owes AMT. Joe "earned" imaginary income of $749,500 on 2 Jan 2010. The accountant asks Joe to write a check to the IRS for approximately $250,000.00 to pay his 2010 taxes. Joe says "wait a minute, why am I paying taxes of $250,000 on a profit of $9,500??" His accountant says "Because you suck."

Joe should have either exercised on 1/1/2008, or never early-exercised at all. Early exercise avoids AMT and starts the cap gains holding period. Never early-exercising means you pay higher taxes on the gains, but you avoid AMT (and, of course, you don't put any money at risk by exercising).

Obviously, things change if you assume the share price will go down. But you wouldn't be working at that company if you believed that.

Final disclaimer: all of this is probably wrong or at least out of date. For example, I heard from a friend that for 2007 you're allowed to recover quite a bit more than usual of AMT paid in prior years, so the situation is possibly not as awful as it has been in the past. Again, hire a professional.

This 'featured' list is a default list for the "Linux" feed that users can select after installing. If they don't want to add their own linux feeds and would rather use the "expert feed" built in function, they'll download the Syndication list I've created for blogbridge. Sound like something you would like to be a part of?

The response to my initial post was a bit underwhelming...remember, this could be just a blog you read on a daily basis. If you have a linux website you can't do without and it has an RSS feed, let me know about it! If you don't feel like doing that, let the authors of those sites know that they can submit their site. Remember, those I choose will get a direct link from this blog to theirs...which is pretty valuable considering I'm in the top two results in google for search term "linux blog".

So, if you'd like to be considered or would like a favorite website of yours to be considered, please drop me a comment here with link to the site. I'll check it out and announce the selections in approximately 2 weeks.

Would you like to have your blog about Linux become a featured blog on the BlogBridge.com Linux Topic Guide? How about a front page link in the "Blogs I Read" column on Yet Another Linux Blog?  If this piques your interest, read on.

I've been a BlogBridge user for quite some time since discovering it with the version 4 release. It has consistently been the best RSS feed reader I have used since that time. I accept no substitutes. They offer the BlogBridge service for free which allows you to publish feeds on BlogBridge.com publicly and share feeds/tags of posts. You can also download Topic Guides to hit the ground running with pre-populated feeds. I am an author of one of those feeds.

Previously, when I reviewed BlogBridge, I was asked to be the Linux Topic Guide at blogbridge.com. Specifics on how this works: I keep tabs on various Linux centric blogs and publish my feeds to blogbridge.com. Then, when someone installs Blogbridge, they may select the Topic Guide that I publish with pre-populated feeds of interest. If you're a BlogBridge user, you can also track down the linux feed or visit the Linux Topic Guide page at Blogbridge.com to see what sites are featured there.

In these past few years I've been doing this, many Linux sites have come and gone. I've changed jobs, states, and distributions. Since all of these changes have taken place, I've missed the launch of some great Linux blogs and websites. Therefore, I'm asking you, the reader to help me find new and exciting blogs and sites that I can feature for BlogBridge.com