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Author: PaulEA One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Re: Disqualified ISO sale across tax year bounda Date: 9/24/2001 6:15 PM
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Yes AMT is subject to $3,000 capital loss limitation. This common mistake when dealing with ISOs and AMT. Regulation 1.55-1 state that unless told otherwise AMT will follow the rules for regular tax.

You may want your friend to check out www.fairmark.com (as stated in the other posting) if you believe I am wrong on this.

"Remember the sale will not be reported on schedule D at all in this case (because it's on your W2 already)."

You still report the stock sale of the Sch. D for regular tax purposes because the taxpayer will get a 1099-B. The basis in the stock for regular tax will be the exercises price plus the amount included on the W-2, so they won't get double taxed. Generally this causes a short term loss because of commissions to sell the stock.

So it sounds like in the situation described the AMT adjustment on line 10 will $3,000.

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