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Capital Losses and AMT
Old 02-18-2007, 05:23 PM   #1
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Capital Losses and AMT

For "regular" capital losses (not related to ISO options), is the treatment the same whether or not I fall under AMT ?

This year I'll fall under AMT. I'm considering taking some capital losses - but if the losses will get "diluted" under AMT for some reason, I may want to postpone taking them until a future year where I'm not under AMT.

Found below link with similar question and answer - just wanted to see if folks here concur. Thanks !!!

Can I apply all my capital losses to capital gains?
August 15, 2005

Subject: ATM - Capital Losses
From: Mark
Date: Mon, 01 Aug 2005

I have a large capital loss being carried forward since 2002. Can I apply all this loss to any capital gains this year if I am subject to the alternative minimum tax? Does the AMT restrict me from subtracting capital losses from capital gains? All of my gains are long term and I have no incentive stock option shares.


Date: Mon, 08 Aug 2005

In the situation you describe, the Schedule D should be identical for regular and AMT reporting, and the current gains can be reduced by the capital loss carryover.

Be aware that tax basis can sometimes be different for regular tax and AMT reporting. As you pointed out, a common difference is for ISO shares, for which the tax basis is the fair market value on which any AMT adjustment is based (generally at date of exercise or the vesting date). Another example is the tax basis of a partnership or S corporation interest for which there are depreciation adjustments for AMT reporting.

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Re: Capital Losses and AMT
Old 02-19-2007, 06:01 PM   #2
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Re: Capital Losses and AMT

I see you haven't gotten an answer on this Dave.

From my experience with calculating Schedule D for AMT, you won't be penalized for any capital losses under AMT - schedule D is identical under both systems as the answer you got implies. I think it's a non issue.

The only time AMT comes into play for capital gains or losses, is if the investments you sell to realize a capital gain or loss have a different cost basis under AMT. This is rare, and usually due to selling stock acquired as part of exercising a stock option - selling of course more than a year after it was acquired. So unless you are talking about stock options, this is a non issue as well.

I am not a tax expert.



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Re: Capital Losses and AMT
Old 02-20-2007, 04:32 AM   #3
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Re: Capital Losses and AMT

Thanks !!!!
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