Am I missing an AMT adjustment?

[jwwinter]

Client exercised $291,620 of ISO stock options all of which is already added to W2 (increased W2 to $459,250. regular wages are $203,630 net of $18,247 deduction for 401k contribution ). Only the standard deduction applies. The AMT report is adding the $291,620 back for what seems like a second time when calculating AMT.

[jwwinter]

Thank you for those who have replied. I am sorry for lacking details. this is a disqualifying disposition and it was an exercise and immediate sale.

[itonewbie · Accepted solution]

This is probably NQSO.  If it's ISO, it wouldn't be added to wages at the time of exercise/vesting until and unless there is a disqualifying disposition.  You may like to double check.

[jwwinter]

Hi, thank you for your reply. I am sorry for lacking details related to my question. This is a disqualifying disposition and it was an exercise and immediate sale. I am still trying to figure out if I just need to override the programs calculations or if I am still not understanding it completely. I thought your comment was answered well and am seeking further thoughts from you.

[itonewbie]

In this case, no AMT adjustment would be necessary pursuant to §56(b)(3) since the disqualifying disposition occurred within the same tax year as the exercise.  In other words, there should be no entry for Line 2i on F.6251.

[rbynaker]

Too many pieces of the puzzle to tell.  Step 1: Get a document that shows what actually happened.  Very few of my clients are savvy enough to really understand what events took place.  This could be ISO or NQSO.  It could be exercise-and-hold or same-day-sale.  Even on exercise-and-hold you'll see a different tax result for cashless vs. strike price paid directly by client with outside funds.