Add me to the list of people confused by AMT ....
I have a client that exercised ISO's and incurred AMT preference income of about $1.2 million in 2021 and 2022. The exercise price was about $1. She had a carryforward MTC of about $260k
In 2023, she exercised another $1.2 million value of ISO's, and sold about $1 million of the previously exercised ISO shares. The stock had declined since the 2021 and 2022 ISO exercises, and she sold it for about 1/2 of the FMV of the exercise.
So she has an AMT loss, and a huge regular tax gain of $800k. I entered the AMT basis into the appropriate box on the Dispositions screen 17.1
I would have thought that the huge AMT losses would offset her regular tax gains. But no, she actually gets no MTC (because she incurred AMT in 2023??) and only $3000 of the AMT loss is used. She owes $350k and is (very) not happy.
Am I doing something wrong? Is there a different way to enter into Lacerte that will get to a better result for her?
Thanks!
Best Answer Click here
Since she exercised more shares in 2023, that increased her AMT, offsetting the AMT loss by selling ISOs. She shot herself in the foot by exercising and selling same year. A generally leading strategy is to alternate exercising and selling ISOs by year to get to use the MTC. So her MTC carries forward until a future year where regular tax exceeds TMT.
Since she exercised more shares in 2023, that increased her AMT, offsetting the AMT loss by selling ISOs. She shot herself in the foot by exercising and selling same year. A generally leading strategy is to alternate exercising and selling ISOs by year to get to use the MTC. So her MTC carries forward until a future year where regular tax exceeds TMT.
Thanks!
You have clicked a link to a site outside of the Intuit Accountants Community. By clicking "Continue", you will leave the community and be taken to that site instead.