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Subject:   AMT
Date:   Mon, 14 Feb 2000
From:   Dave

What is the $45,000 AMT exemption for married taxpayers? How do I know I qualify? What is an AMT Credit? Is it only recovered in the year the stock is sold? Can AMT's be paid to Uncle Sam over a 3-5 year period?

Answer

Hello Dave,

Married persons who file a joint return have a $45,000 exemption when computing the alternative minimum tax. The exemption is phased out when alternative minimum taxable income exceeds $150,000.

To find out if you are eligible, complete Form 6251, the Alternative Minimum Tax form for individuals.

The alternative minimum tax credit is a portion of the alternative minimum tax that relates to "timing" adjustments, such as the tax preference for incentive stock options. The credit may be recovered in future years when the regular tax exceeds the tentative alternative minimum tax. See IRS Form 8301.

Although some of the credit can be recovered in years when the stock isn't sold, the largest amounts are used when there are negative AMT adjustments, such as the basis adjustment for ISO stock when it is sold.

There is no interest-free, penalty-free installment arrangement for the AMT.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

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.