www.fairmark.com/amt/credit.htm
Claiming AMT Credit Are you overlooking an opportunity to claim AMT credit? Certain items under the alternative minimum tax AMT give rise to a credit you can claim in a later year. You dont get to claim AMT credit if you paid AMT because you had a large number of exemptions, or a large itemized deduction for state and local taxes. Yet you may be able to claim AMT credit if you paid AMT because you exercised an incentive stock option. The credit can also apply when AMT arises from certain other timing items, such as an AMT adjustment relating to accelerated depreciation. Many people assume that if the AMT credit arises from exercising an incentive stock option, they cant claim the credit until they sell the shares they acquired by exercising the option. Selling ISO shares may help you claim a larger AMT credit, but you can claim the credit without selling shares if your regular income tax is larger than the tax figured under the AMT rules. Example: Suppose you exercised an incentive stock option in 1999, planning to sell the shares when they matured in 2000. You paid $10,000 of AMT on your 1999 tax return, but the share value dropped before you had a chance to sell. You decided to hold on and see if the value of the shares would recover. Several years later you still hold the shares, and now youre wondering if you can sell the shares to claim the credit. Chances are that you could have recovered most or all of the AMT credit already, on your tax returns for years 2000 through 2003. Depending on your situation income level, filing status, number of personal exemptions and so forth you may find that you were entitled to hundreds or even thousands of dollars of credit each year without selling the shares. Heres the rule: If you pay AMT because of exercising an incentive stock option, you need to file Form 6251 for the year of exercise. Then every year after that you need to file both Form 6251 and Form 8801 until youve claimed the entire credit. If you didnt file Form 8801 with your prior year returns, you need to amend those returns, for two reasons. And the other is that theres no way to claim the credit in a later year without filling out this form for the years intervening between the year you paid AMT and the year you claimed the credit. Thats because the amount of credit available for you to claim depends on what happened in each year. You dont know the amount of your credit carryover to 2004 without filling out this form for 2003. But to fill it out for 2003, you need the numbers from Form 8801 for 2002 and so on, back to the year you paid AMT. Time is Running Out As a general rule youre allowed to go back and amend tax returns for three years. If you failed to claim AMT credit that was available for your year 2000 tax return, you need to file the amended return by April 15, 2004 or three years after the actual filing date if you applied for an extension and filed within the extension period. Why not just forget about those prior years and claim the credit beginning in 2003 or 2004? The amount of credit that carries over from one year to the next depends on the specifics of your tax return for each intervening year, not that amount of credit you actually claim.
|
http://csua.com/feed/