"Is the bargain element taxed as regular income or does it become part of the AMT calculation?"
It's an adjustment - addition to income - for the AMT calculation.
"1 - Using the bargain element from a portion of my vested ISO's in order to exercise another portion of my vested ISO's."
I'm not sure I'm understanding exactly what you're saying here. Is this a situation where you exercise ISO "#1" and, in effect, "sell" those acquired shares and use the "cash" so raised to exercise ISO "#2"?
If that's it, then any shares, in effect, "sold" from ISO #1 should show up as compensation to the extent of the bargain element and any shares originating from this ISO not sold by year end would be an AMT adjustment. The same would apply to ISO #2, so if you didn't end up with ALL the shares in the grant for ISO #2 - maybe because some shares were used "for taxes" or "for exercise", then the bargain element for those shares would also show up as compensation and shares not sold by year end would also be an AMT adjustment.
A "cashless" exercise pretty much guarantees the creation of compensation since you "used" the FMV of a portion of the grant - in effect sold some - to pay for the exercise and/or the withheld taxes.
