itonewbie
Level 15

No, ISO will never be subject to double tax.

If the disqualifying disposition occurred in the same year it was exercised, there is no adjustment for AMT on F.6251.  You would calculate the gain/loss using the exercise price plus the bargain element already subject to tax in Box 1 as the cost basis.

If it happened in a year after the exercise, the bargain element should have already been subject to AMT in a previous year.  You would then have different cost bases for regular tax and AMT.  The basis for regular tax would be as I described above and the cost basis for AMT would be adjusted by the income that had been recognized in the previous year, which will result in a smaller gain or larger loss.

ISO is a deferral item for AMT purposes, meaning it creates only timing differences.  That's also what could result in MTC.

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