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Returning Member
posted Mar 29, 2023 7:27:22 AM

AMT Schedule D is not taking into account long-term non-covered (box E) losses (regular Schedule D is getting this right). Simple stocks/options trade. How to fix this?

For additional context, my tax situation is very similar to what it was last year. The interests, dividends, W2 are all within less than a percent of last year's. The difference is in investment activity (1099-B was received). In this case, I sold some long held mutual funds for a loss - parts of these mutual funds were acquired prior to 2012 and hence these were categorized as long-term non-covered trades. And these are trades in equities/options (nothing fancy/exotic and no ISOs (incentive stock options), etc). I was expecting my tax bill to be lower because of this (i.e. everything similar to last year except for the tax loss harvesting). Instead, what I am finding out is that I am getting hit with AMT! After going over the forms in Turbo Tax, I am finding out that the biggest culprit is the AMT Schedule D - the AMT schedule is NOT offsetting my short term gains with the long-term non-covered losses that I took (the regular/plain vanilla Schedule D is getting this right by offsetting my short term gains with the long term losses). As a result, there is a difference between the gains in regular schedule D and AMT schedule D and that is triggering my AMT. So what I am looking for is the right way to do this so that Turbo Tax recognizes the long term non-covered losses in AMT Schedule D.

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5 Replies
Expert Alumni
Mar 30, 2023 9:59:22 AM

Correct, long term losses are one of the big triggers for AMT. There is no correcting the loss on AMT but there are a lot of worksheets and rules.

 

I am assuming line 2k is your issue. The 6251 uses the $3,000 cap in figuring the AMT. Please see Form 6251 instructions which includes this portion of an example for line 2k:

For the AMT, you have a $25,000 short-term capital loss from the first sale, and a $40,000 long-term capital loss from the second sale, resulting in a net capital loss of $65,000 for the AMT. However, only $3,000 of the $65,000 net capital loss is allowed for 2022 for the AMT. 

Returning Member
Mar 31, 2023 5:18:58 PM

Hi AmyC,

Thanks for taking the time to respond. In the instructions you linked to, it was an example of ISO exercise - in my scenario, there is no ISO involved. Here are some more details regarding my taxes:


1. My 6251 has a positive value on line 2k. This came as a surprise to me. So I went looking for how it got there.
a. My Schedule D shows a short term gain on line 7.
b. My Schedule D shows a long-term loss, say,

LT1

on line 8a.
c. My Schedule D shows a long-term loss, say

LT2

, on line 9. Both line 8a and line 9 agree with the 1099-B I received.
d. Note that these are all regular stocks/options trades through my brokerage account - no ISO involved in this.
e. My Schedule D has a net long-term loss on line 15 after netting out all the gains against the losses.
f. The combined line 16 shows a net gain, say

N1

.

2. Next, I went and looked into my "Schedule D AMT".
a. Line 7 shows a net short-term gain - this agrees with line 7 on the regular Schedule D.
b. Line 8a shows a long-term loss of

LT1

- again, this agrees with line 8a on the regular Schedule D.
c. However, line 9 is not filled out by Turbo Tax (it is blank) - as a result, my long-term loss of

LT2

is not being considered in AMT calculations.
d. All the other details for the long-term gain/loss in Schedule D AMT is identical.
e. As a result, my Schedule D AMT shows a net gain of

N2

on line 16 -

N2

is much higher than

N1

(from line 16 of regular Schedule D).


What I am not clear on is, why are my long-term losses (for which the broker didn't report cost-basis to IRS) not being considered in "Schedule D AMT"? The instructions on line 9 of "Schedule D AMT" says: "Long-term totals from all Forms 8949 with box E checked" - going by that, I expect Turbo Tax to have filled in line 9 with the value from form 8949. My form 8949 does show

LT2

with box E checked. So why was that not populated on line 9? This is resulting in a larger/additional tax burden on me.


Any insights would be much appreciated!


Thanks,
AJ

New Member
Oct 8, 2023 1:14:37 AM

I also have the issue that Schedule D AMT is not reporting the amounts from Box E. (Data imported from Schwab.) This appears to be a bug that has not yet been addressed by TT.

Is the proper solution to Override and enter the amounts on Schedule D AMT Part II line 9?

I see no other way to report the correct amounts.

I would appreciate a reply from TT -- it is 7 days to the filing deadline.

Returning Member
Oct 10, 2023 6:00:08 PM

Hi @RLKalman - after being on hold for what felt like hours, I was finally able to get hold of a specialist on the phone at Turbo Tax. After describing the situation, which she was able to quickly grasp thankfully, she acknowledged that this was indeed a glitch on TurboTax and that it was going to be fixed for 2023, but not for 2022. So she suggested to mark the Box E transactions as a Box D transaction and enter the accurate cost-basis and file it. This definitely solves the problem, but also increases the audit risk. The specialist was of the view that this is not a significant audit risk and that if an audit does happen that I should contact TurboTax.

 

So as far as I am concerned, this is a very good resolution for me.

 

Having said that, each case has different details - so I hope you contact customer support as well (if you haven't already) to get this resolved.

 

Best,

AJ

Level 1
Apr 14, 2024 9:13:56 AM

Line 15 from my 2022 Schedule D AMT is -7,285 which is very different from my regular 2022 Schedule D Line 15 which is -1,657.  It looks like this difference is because Schedule D AMT is not including the value from Long-Term Box E value 5,628.  My regular Schedule D has no Capital Loss carryovers, and I've never had to pay AMT.  But this big difference in the 2022 Schedule D AMT Line 15 compared to 2022 regular Schedule D is causing a large Capital Loss Carryover for AMT into 2023/2024.  Is this caused by a TurboTax system problem that still hasn't been fixed?  If this is a mistake, how do I correct it on my taxes?  Does this error not matter because I don't pay AMT?  Still, if it is an error, it should be corrected so that it doesn't continue getting carried over every year.