Statement of Larisa and John Bickel Cedar Rapids, Iowa

Over the past few years numerous articles have been written articulating the impact of the Alternative Minimum Tax.  While much effort has been made in providing relief there is still considerable work to be done.  Having worked for McLeodUSA, CLEC based in Iowa, since graduation from college I have experienced the roller coaster of the tech boom and bust.  While we have been very careful to live within our means we have also been impact significantly.

We have lived a very conservative lifestyle and thought we were planning responsibly for the future of our family.  We have a son who is 7 years old who was born prematurely with a hearing loss and multiple other issues that have required hearing aids (which insurance does not cover), physical therapy, occupational therapy and speech therapy to this point.  Because of our prior financial planning and saving, we had always been able to meet his needs financially.  Fortunately our 5 year son was born without such complications.

In the fall of 2000, we vested a portion of my McLeodUSA stock options for the first time when the stock was at $18.  We borrowed almost $40,000 to pay for the stock.  We did not sell any of the options in anticipation of "holding the stock for one year after exercise in order to avoid taxation at the ordinary income on the value at the point of exercise."  As a result, we paid approximately $80,000 in alternative minimum taxes.  We were able to pay for about one-third of this out of our own savings, but then had to take out a home equity loan for the remaining two thirds.

The stock’s value plummeted, the the company filed for bankruptcy leaving the stock valued at $0 – leaving us with essentially nothing of value to sell and burdening us with the reality that we took a $50,000 loan for the alternative minimum tax which is essentially an interest free loan to the government because we can not simply obtain a refund of the overpayment.  We also owe $40,000, the purchase price of the stock, which is now worthless.  The reality is that this situation has been devastating for us.  We are overwhelmed by the burden of the debt created by paying this tax.  Because of paying this tax, we are unable to start a college education fund for our son, provide the financial resources needed to fund the special help he will require during his primary school years, and fund our retirement account.  We are forced to live at a barely subsistent level.

We want you to know that this is financially and emotionally devastating to our modest-income family.  We thought we were doing everything right to become financially independent and now our reality is far from that, with an incredible debt in store for the future.  This alternative minimum tax is devastating to those affected in the modest-income level, as well.

We thank Congressman Neal and others immensely for their efforts to help right this situation.  Please let us know if there is anything we can do to assist you in this matter.