Hello,
I had short term capital gains in 2022. I also sold some long held mutual funds that were losses. I was hoping that some of my gains will be offset by the losses.
When my broker sent me the year end tax documents, the mutual fund sales were categorized as "Long term transactions for noncovered tax lots" - i.e. Box E checked and basis not provided to IRS.
I dutifully imported all this information into TurboTax and was surprised to find out that I was triggering AMT (these mutual funds are not ISO or anything special - they are simple funds (tickers MIDSX, UJPIX)). After generating the PDF of my tax returns and looking deeper, I noticed that the "Schedule D AMT" was not considering my losses from the mutual fund sales (my regular Schedule D was taking the mutual fund losses into account correctly). That left me scratching my head and decided to play around with the transactions a little bit. I went into the "Investment Income" section under "Wages & Income", looked up the mutual fund transactions and in the "Sale category" drop down, changed it from "Box E - Long term noncovered" to "Box D - Long term covered" to see what effect that had. To my surprise, my AMT went away! This was because, the "Schedule D AMT" was now taking into account the losses from my mutual funds (just like Schedule D was doing) and as a result my AMT was now lower than the regular tax.
This really is surprising me and making me wonder what is going on. Anyone out there having a similar issue? Any way to "work around" this issue? Or is this the way AMT is supposed to work (I would be shocked if this is the way it is supposed to work)? The unfortunate part for me is that when AMT is triggered, it increases my tax burden by a lot and I would like to avoid that.
Best,
AJ
NOTE: I would like to point out that even though my broker did not report the cost basis to IRS on the mutual fund transactions (Box E - long term noncovered), my 1099-B did contain the cost-basis for my information and that is the exact cost-basis I entered into TurboTax as well.
