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Date:   Sat, 10 Jun 2006
From:   Josh

I have a large AMT capital loss carryover from selling ISO shares in one year for much less than the exercise price in another year, and a large AMT credit. Each year, the credit has been unused and reduced on Form 8801. I believe I should be including the amount from Form 6251, line 16 (the usable part of my AMT loss carryover) in the calculation of Form 8801, line 2.

Is the capital loss adjustment included on Form 8801, line 2?

Answer

Date:   Wed, 14 Jun 2006

Hello Josh,

No. Line 2 is for exclusion items, which are items reportable for regular tax purposes, but not for AMT purposes. See the instructions for line 2. These items include the AMT "add backs" of the standard deduction, medical expenses, taxes, mortgage interest (usually from equity lines of credit), and miscellaneous deductions.

I suggest that you simply follow the instructions for the form.

The main way to recover your AMT credit is to generate capital gains. The AMT capital loss carryover will reduce the capital gains on your AMT schedule, thus enabling you to use the AMT credit carryover.

Consider hiring a tax return preparer. That's what we're here for.

Good luck!

Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.