How to use AMT Credit

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  • #5456
    ckone
    Participant

    After receiving, exercising, and selling the stock from ISO options I received over the years I have been left with a large AMT credit that has been riding along on my 8801 for 6-7 years, dropping by a few percent each year. I’m looking for opportunities to put this credit to use. With the Tax Cut and Jobs act greatly reducing the impact of AMT, I’m considering converting IRA funds into Roth IRA funds as a way to take advantage of the credit today and reduce taxes down the load. Is this a strategy that others are using? Does is this or other AMT credit strategies covered in the current version of any of Kaye’s books? I haven’t bought updated versions since the 2009 editions and I’m looking for new strategies.

    #5458
    gighi
    Participant

    I am in a similar position with a 6 figure AMT credit and haven’t found too many obvious ways. It all boils down to increasing your taxable income so the spread with AMT is increased.

    These are some ways I have used over the years:

    – Get a new job that pays much more W2 income 🙂

    – Sell exercised shares: adjusting the cost basis for AMT purposes typically substantially increases the AMT vs regular tax spread and the amount of credits one can use, though it can be a double edged sword because large long term capital gains will eat all your AMT deduction…

    – Do an exercise-and-sale of some other options you weren’t going to exercise anyway, if you have the possibility of doing so: this will heavily bump your w2 income for the year due to the disqualifying disposition, so you should be seeing a larger than usual spread

    Unfortunately, nothing of substance, but I am definitely following this thread.

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