AMT Calculation: How to calculate ISO adjustment in the year of ISO sale (long-term gains)

Forum|Forum|3 months ago
April 13, 2026
2 replies
138 views

Scenario:

- I exercised ISOs in 2020 - Strike price of $2, FMV of $20 (and paid AMT at that time)

- I held stock and sold in 2025 - Sell price $100

- I accounted for sale of stock in 2025 in long-term cap gains

Question: How do I adjust AMT? I'm currently on this page in Turbo Tax (see screenshot below) and I'm not sure what to enter in the "Enter the amount of your ISO adjustment that was a long-term capital gains/losses".

MaryK4

Level 15

For the year of a qualifying ISO sale, your ISO adjustment is a negative number that represents the "bargain element" you already paid AMT on when you exercised the options. This prevents the IRS from taxing that same gain twice. Since you already "pre-paid" tax on the $18 spread in 2020 via the AMT system, this negative adjustment reduces your Alternative Minimum Taxable Income (AMTI) in 2025 so you only pay AMT on the remaining gain. It also may trigger the AMT Credits (Form 8801) which can be used against your regular tax.

You would take your regular gain ($98) minus AMT gain ($80) and enter it as a negative (-$18)

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kandzAuthor

Level 2

Thanks for the reply! To confirm, I would enter $18 (which is the FMV at time of exercise less exercise price) X number of shares sold? So if I sold 100 shares, I would enter $1800 ($18 X 100) in the turbotax box shown in the screenshot

DavidD66

Level 15

Yes, you would enter $1,800 in the box for long-term ISO adjustment.

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