Form 6251, 8801 & AMT Tax Credit for Exercised ISOs

Home Fairmark Forum Equity Compensation Form 6251, 8801 & AMT Tax Credit for Exercised ISOs

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  • #5449
    carlyg
    Participant

    Hi Fairmark Forum Friends!

    I paid AMT in 2017, 2018 and 2019. My 6251s show the following AMT payments for each year :
    2017 (line 35) = $48
    2018 (line 11) = $2,462
    2019 (line 11) = $31,155

    However, when I look at my 8801s (and try to project an 8801 for next year) it is showing zero as a carry forward credit. In fact, turbo tax is not even generating an 8801 for me this year (2019) because it says I have zero carryforward from 2018. I believe I should have $2,462 that I can keep carrying forward to use in a year when I don’t pay AMT.

    I was under the impression that could “stash up” these AMT credits (if generated from timing related deferral items, like exercising ISOS) and use them down the road in years when I am not paying AMT.

    My questions are :

    1) Is that true, should I be able to stash up these credits? Or is the “AMT credit” I’ve read about really just an adjust to the cost basis in the year that I sell these exercised ISOs?

    2) If the “amt credit” really is just an adjusted cost basis, what tracks this adjusted basis? I know I can keep track manually, but is there a specific form & box on my taxes that I should make sure is calculating properly

    3) Has anyone run in to this with Turbo Tax?

    Thanks in advance for the help & the great book!

    #5451
    gighi
    Participant

    I am by no means an expert, but I can confirm that AMT credit is completely different from the adjusted cost basis: you adjust the cost basis for AMT purposes when you sell your shares, but the AMT credit can be recouped earlier/later, purely on the spread between regular tax and AMT tax in any given year.

    I have always used TurboTax and it correctly calculates my credit and carries it forward. I have credits that I am carrying forward from 2015 because I haven’t used them all.

    The fact that TurboTax doesn’t generate an 8801 for your 2019 return is definitely weird, if the $2,500 you paid was indeed caused by ISO exercise.

    What happens if you go through the interview in TurboTax in the proper section? I use TurboTax desktop and you can force going through it, it will ask to plug in some numbers from your 2018 form 6251.

    Another thing you can do is to try to manually fill form 8801 based on the irs instructions: it’s not too difficult and at least you’ll figure out if it’s a problem in TurboTax or if the carryforward from 2018 is legitimately disappearing in 2019 due to some other math.

    I would love for you to post your results, I’m always interested in people dealing with AMT credits!

    #5455
    carlyg
    Participant

    Hi Gighi – Thank you for the recommendation to download and fill out 8801 on our own!

    We just did that, and got the results we expected! We then called Turbo Tax, for about the 8th time haha but this time we knew that we should be generating an 8801.

    The issue ended up being an input on one of the wizards. With the online version of 2019 turbo tax when you navigate to Deductions & Credits -> Credit for AMT paid in a prior year -> lets get info from last year. We entered line 27 from form 6251 instead of just entering exclusion items that were on line 27. We didn’t read the fine print closely enough, the tool tip clearly says enter any exclusion items from line 27 on 6251. I guess that is what you get for doing taxes when you are tired 🙂 We only had deferral items (the exercised ISOs). When the amazing Turbo Tax CPA pointed this out we all quickly realized this is 100% what was stopping the 8801 from generating.

    Thank you again for the help! You saved us at least a couple hundred bucks. Our next step was to pay a CPA for a hour or two of their time to talk through this if we couldn’t get it figured out with Turbo.

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