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AMT nightmare caused by stock purchase

Asked Jan 24, 2012, 06:50 AM — 7 Answers
Hello. In 2000 I made a stupid mistake. I exercised a company grant by purchasing 3000 shares @ $2/share with the intent of holding the stock. Its market value was $60/share. That tax year I got a lesson on AMT and incurred a $50,000 tax bill, and I've been taking part of the carry over loss year after year ever since, tracked by Turbotax. But all good things come to an end and in 2011 I sold 3000 shares @ $13/share. Hopefully TT will handle this disaster but perhaps someone can tell me how this resolves? Thank you. Jeff

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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,866, Reputation: 3723
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#2

Jan 24, 2012, 07:48 AM


If you do not understand the tax implications of the sale, then RUN, DON'T WALK to a local tax professional with experience in stock sales to make sure the tax issues are treated correctly.

His fee (probably $250 - $500) is worth it to avoid the potential headaches with the IRS if you do NOT treat this issue correctly.
jeffrs (Jan 24, 2012 09:55 AM):   Source:
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jeffrs Posts: 4, Reputation: 10
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#3

Jan 24, 2012, 01:09 PM
Respectfully, this is not helpful. I have at least 3 months to figure this out so the run don't walk response is just hyperbole.
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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,866, Reputation: 3723
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#4

Jan 24, 2012, 01:23 PM


Yeah, I probably over-reacted a bit, but the advice to seek out professional tax help still stands.

Besides, if you DO use a tax pro, you will want to take the time to interview several tax professionals to make sure you are using a true professional, and not someone who just does data entry into tax software on a computer. The recent changes and testing requirements by the IRS are just now going into effect, so there will be at least one more year of tax-professionals-in-name-only who will prepare returns incorrectly for the 2011 tax season.
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jeffrs Posts: 4, Reputation: 10
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#5

Jan 24, 2012, 01:39 PM
For laughs and giggles, let's assume I will not hire a tax professional.

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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,866, Reputation: 3723
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#6

Jan 24, 2012, 01:46 PM


You should be able to resolve the matter and claim the AMT credit that theoretically carried over from year-to-year if you consistently used TurboTax and imported the previous year's tax return.

If it happens, you may find yourself getting a significant refund.

If that does NOT happen, then definitely give the tax professional a call.
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jeffrs Posts: 4, Reputation: 10
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#7

Jan 24, 2012, 01:56 PM
OK, thank you. I have used TT since 1994. Without it, tracking AMT would certainly require a pro.

I suppose the concern is how to associate the sale of this stock with the AMT event that it precipitated.
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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,866, Reputation: 3723
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#8

Jan 24, 2012, 02:04 PM
You will probably need to make that connection, as the tax software is JUST a program; it does NOT read minds. I recommend that you use the Interview option on the software to ensure they ask you if the stock sale had AMT implications.
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