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Date:  Tue, 14 Mar 2006
From:   Wendy

I have a question about AMT credit carryovers. (See our article on "The Amazing Disappearing AMT Credit.") Are you saying the minimum tax credit carryforward that arises in Year 1 may not be fully recovered in subsequent years that have no AMT? I've run a calculation over and over on a client and some of the credit carryforward is used, but then no carryforward to 2006 for the balance. I didn't think this was possible, so I would like confirmation.

Thanks in advance,
Wendy

Answer

Date:   Sat, 18 Mar 2006

Hello Wendy,

It's possible.

It depends on the mix of "timing differences" and exclusion items for the particular taxpayer.

Also, many taxpayers are finding they have AMT tax liabilities on an ongoing basis because of disallowed deductions for items like state income taxes and property taxes on their real estate, so they can't use their AMT credit carryover indefinitely.

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.