apjoshi[at]hotmail.com (aj) wrote:

- quote -

As I understand it you will have to pay capital gain (or
loss) on the difference between the price you paid for the
stock (i.e. the option price) and the price you sold it for.
This is when computing your taxes by the regular method.

You will have an AMT loss on the difference between the AMT
price and the sell price, but that is applicable only when
computing your taxes by the AMT method.

The only good thing is that your regular taxes may be
somewhat higher than your AMT taxes this year and you might
recapture some of the AMT that your previously paid.

Good luck,

Nate Liskov

--
nateNOSPAM[at]lcs.mit.edu http://nateliskov.ne.client2.attbi.com
or http://home.comcast.net/~nateliskov

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apjoshi[at]hotmail.com (aj) writes:

- quote -

Welcome to the world of dual-basis assets.

Your stock has an AMT basis and a regular tax basis.
You compute the regular tax gain or loss, then compute
the AMT gain or loss, and then you get an in-your-favor
AMT preference item for the difference. However, it
is very important to note that before taking that difference,
you have to apply the $3000 loss-limit rule.

To be concrete, assume you exercised an ISO on 10000sh
with an exercise price of $10 when the stock was at $20.
Today you sold those 10000sh for $12 each.

Regular tax cap gain:
Capital gain of 10000*(12-10) = $20,000

AMT cap gain:
Capital gain of 10000*(12-20) = -$80,000 (i.e. loss of
$80,000) Next you have to apply the loss limit, which
means your AMT capital loss for the year is $3,000 (and
so you'll carry over a $77,000 AMT capital loss into
next year)

AMT in-your-favor preference on sale
= Reg tax cap gain - AMT cap gain
= $20,000 - (-$3,000)
= $23,000

So when you do the AMT part of your tax return, you'll in
effect take a $23,000 deduction on that. It is likely this
deduction will push your tax as figured under the AMT will
below your tax as figured under the regular tax. You can
likely claim that difference as a tax credit.

BTW, since the year when you exercised the ISO, you have
been filling out your Form 8801 (I believe that's the right
one) to see if you have any AMT credit? There's a good
chance you may well have had a couple of thousand dollars
credit each of the past few years.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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I had paid AMT on exercising my stock, but I did not sell
those stocks that year. Now I sold the stocks recently at a
much lower price than the AMT stock price. these were ISO's
of course.

my question is how do I report the stock sale, I have
already paid AMT on teh stock for way more than I sold the
stock at. can I take a loss on the difference between the
AMT price of the stock and the selling price ?

thanks
aj

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