AMT recapture

[zetta]

Can anyone point me to some good info on AMT recapture? I tried having my taxes done by two different CPA's who claimed to understand AMT, but at the end of the day their understanding was about the level of "you get back what my computer spits out". TurboTax can do just as well for me!

My situation is that seven years ago I was working for a privately-held company. Believing that an IPO was coming and I was going to hit it bigtime, I exercised a bunch of stock options (big mistake!) and ended up paying $40k in AMT. I'm slowly recapturing it little by little, sometimes as much as $2,500, sometimes as little as $850. Currently I still have a carryover of about $27,500. The company stock went through several rounds of refinancing, resulting in reverse splits, and in 2006 was finally bought out by another company. My original 22,000 shares cost me something like $2,500 and netted me a whopping $314.56!

What I'd really like to know is whether finally getting having that stock show as an actual loss is going to help me recapture my AMT any faster. If not, what variables such as income and stock behaviors will lead to AMT being recaptured faster or slower.

[MonkeyMama]

Re: AMT recapture

I understand AMT but not so much the recapture. So I will let someone else reply.

BUT congress just passed a new law to grant some relief for the people caught up in this stock option mess. I don't remember the details, but don't get too excited, I remember thinking "too little too late." I mean come on, like 5 years later they finally offer some relief. With no fix to the problem from preventing this from happening again.

Well I found this article - skimming it yes - you may be able to recover in 2 years:

http://www.fairmark.com/execcomp/credit-relief-1.htm

[MonkeyMama]

Re: AMT recapture

Wow! I was pondering why I did not know that much about AMT credit(because believe me AMT is a huge issue in california - most of our clients have AMT issues - and I Feel I understand AMT well) so I Was looking it up a little more. I guess it only applies to ISOs and like depreciation or something. I know we had some clients caught up in ISOs & AMT in my old job - around 2001 - but haven't dealt with it since.

No wonder.

Yeah most CPAs not in a high-tech, stock option heavy area probably never seen it before. Even though I did early in my career I don't remember squat about it. It is a pretty rare/specific provision. It's the kind only CPAs with really high-wealth individuals (meaning millions in income) are going to be well-versed, but people caught up in this are not necessarily rich and don't want to go pay hundreds/thousands to a CPA for such an easy tax return otherwise. & so it goes... You probably are best to read up what you can. I worked at a fairly large CPA firm in the silicon valley (land of the stock option) in 2000& 2001 and only saw this ONCE - we might have had a handful of clients caught up in AMT.

The link I sent you - that website actually has a lot of interesting articles and info about the AMT credit. Good Luck.

[zetta]

Re: AMT recapture

WOW!!! This link is fantastic! I had no idea this rule had been passed, and it's going to be a huge benefit to me. The 20% recapture rule is pretty weird, but a back of the envelope calculation suggests I will get the remainder of my money back over the next 6 years, and have really big returns along the way. Thank you! Thank you! Thank you!!!