Lack of AMT on ISO exercise creates a bunch of tax loopholes.<p>Imagine a family member transferring a large family asset to the next generation by treating the asset as a corporation which keeps issuing new shares. If shares are transferred as-is, the recipient would have to treat their value as income, so instead the corporation issues a bunch of ISOs and allows the recipient to exercise those.<p>If the shares are never sold, the recipient avoids income tax and estate tax on a fairly large wealth transfer.<p>&gt; if investors are buying preferred shares and not common stock which the employees own, how is the fair market value of the ISO&#x27;s determined?<p>IRS code section 409a. Companies typically hire 409a evaluators who have data on companies with similar metrics. But from employee&#x27;s standpoint it&#x27;s basically the strike price of ISOs issued to someone who&#x27;d join today.