Because income is being recognized for AMT purposes, there is a different cost basis in the shares for AMT than the shares for regular income tax purposes. For AMT purposes, the cost basis is the strike price plus the AMT adjustment—the amount reported on Form 6251, line 2i.
How do stock options affect AMT?
Unused AMT credits In the year that you exercise an Incentive Stock Option, the difference between the market value of the stock on the exercise date and the exercise price counts as income under the AMT rules, which can trigger an AMT liability. You can use the credit to lower your tax bill in later years.
How do capital gains affect AMT?
If you have qualified dividends and long-term capital gains, they are taxed at federal rates no higher than 20% for purposes of both the ordinary income tax and the AMT. However, the extra income could reduce or even eliminate the amount of income you can exempt from the AMT.
How is the Amt calculated for a stock option?
The AMT is charged when you exercise your ISO, hold on to your shares and sell them after the calendar year in which they were awarded to you. The AMT is calculated based on the difference between the fair market value (FMV) of the shares on the date that you exercised the shares and the exercise price.
What’s the difference between AMT and cost basis?
So, if your buy-in price (or strike price) was $1 and your bought 10,000 shares, your Cost Basis is $10,000. But if you hit AMT levels for the year, you don’t get to use your strike price to figure Cost Basis. Instead, you’ve got to use FMV, or fair market value, at the time you exercised.
What is the standard exemption for AMT for 2012?
$AMT standard exemption ($78,750 for 2012 joint filers; $50,600 for unmarried persons; $39,375 for married filing separately. This is reduced by 25 cents for each dollar of AMT taxable income above $150,000 for couples,$112,500 for singles and $75,000 for married filing separately.)
Is there a difference between regular tax and Amt?
The difference between the deduction for regular tax and for AMT was added back in calculating AMTI. Years 2013 through 2016: For 2013 through 2016, for most taxpayers, the deduction for medical and dental expenses was subject to the same floor (10% of AGI) for regular tax and AMT, so no adjustment was generally necessary.
