Exercise of ISOs that previously paid AMT, now calculating sale gain in current year

[ywondery]

I exercised ISOs in 2018 at $3 per share, FMV was $23; therefore, I paid AMT in 2018. I sold them in 2021 for $25. Turbotax is showing a long-term capital gain at $25-3, vs $25-23. Is this right? If not, how do I fix it in turbotax? I would have expected the new cost basis on the sale to be $23 since I previously paid AMT on them?

[RaifH]

You would not adjust the basis on the stock sale, but you can claim credit for the AMT already paid. For more information and an example, see this TurboTax article on ISOs. To claim credit for AMT paid in a prior year, you will need your 2020 tax return, then go to Federal > Deductions & Credits > Estimates and Other Taxes Paid > Credit for AMT Paid in Prior Year.

[alanski1]

I have the same situation with AMT paid in 2018 and sale taking place in 2021. I tried to follow advice below to claim AMT credit but it did not work, maybe because the AMT was paid in 2018 and not in 2020? Is there another way to get credit for AMT paid on ISO exercise in 2018?

[DianeW777]

The AMT credit can be entered by following the steps outlined by our Tax Expert @RaifH and placed here for your convenience.

1. Deductions & Credits > Estimates and Other Taxes Paid > Credit for AMT Paid in Prior Year.
2. Enter the amount of your credit (AMT paid in 2018) in the box Form 6251, line 11 and Form 8801, line 26 (should have been included in your return as a carryforward credit in 2020).
3. You will need the information from your 2018 tax return  to complete this section

You can always amend your 2020 return to include Form 8801 after your file your current year return.  You do not have to wait. Keep the 2018 return together with your 2021 tax return for verification of your information.

Who Should File Form 8801?

Complete Form 8801 if you are an individual, estate, or trust that for 2018, 2019, 2020 had: 

• • An AMT liability and adjustments or preferences other than exclusion items (this applies to you).