AMT and Equity Compensation
Alternative minimum tax, nonqualified stock options, incentive stock options and other forms of equity compensation.
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Posted by: aaronjones33149, March 17, 2015 09:01AM
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Re: AMT credit reduced even though not used?
Posted by: Art, March 18, 2015 01:47AM
Have you looked to see if the credit reduction was related to the AMT reduction?

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Posted by: aaronjones33149, March 19, 2015 10:54PM
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Re: AMT credit reduced even though not used?
Posted by: Art, March 20, 2015 03:16AM
It is possible that instead of showing up as a tax credit, it reduced AMT. So you wouldn't guess it helped you.

Re: AMT credit reduced even though not used?
Posted by: Kaye Thomas, March 21, 2015 04:38PM
Art's last comment is correct. In reality we're dealing with three tax systems: regular income tax, AMT, and AMT with only the exclusion items. When you avoid paying AMT despite having a situation where your AMT from exclusion items exceeds your regular income tax, you've received a benefit from timing items (items other than exclusion items). Therefore, your AMT credit carryover, which relates to timing items, is reduced. In my writing about AMT I rarely mention this issue because it's so technical that most people merely find it confusing and few ever notice it (seems like we get a question about it once every five years or so). I try to keep it in mind and talk about the AMT credit lasting until it is consumed (or similar word) rather than until it is recovered.

Kaye Thomas
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Posted by: aaronjones33149, March 22, 2015 01:53AM
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Re: AMT credit reduced even though not used?
Posted by: Kaye Thomas, March 22, 2015 03:06AM
I'll make up some numbers. Say your regular tax for 2013 was $30,000, and AMT with exclusions came in at $31,000, meaning you would have owed $1,000 in AMT if there were nothing else. The adjustments from sale of your ISO stock brought your AMT down to $24,000, so you claimed $6,000 AMT credit, the difference between regular tax and AMT. You used only $6,000 of credit, but you received $7,000 of benefit from timing items because after using the credit you paid $24,000 in tax, but without the adjustments you would have owed $31,000. You aren't being penalized twice; you're being prevented from getting a double benefit.

Kaye Thomas
Fairmark.com

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Posted by: aaronjones33149, March 22, 2015 04:12AM
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Posted by: aaronjones33149, March 22, 2015 04:20AM
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