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Subject:   ISO Questions
Date:   Mon, 07 Mar 2005
From:   Rick

When preparing Form 6251, the amount that I calculate for line 16 (gain or loss adjustment) exceeds the amount used on line 13 (adjustment for exercise of ISO) when I bought the stock. When I try to understand the changes for lines 37-39, I'm totally lost. The instructions talk about "AMT Schedule D" and "AMT Qualified Dividends and Capital Gain Tax Worksheet", neither of which exist on the IRS web site. I have no clue how to calculate these lines.

How do I find someone to help me with this?

Answer

Date:   Mon, 14 Mar 2005

Hello Rick,

Your instincts are right. The adjustment at line 13 shouldn't be more than the original adjustment when you bought the stock.

When the instructions say "AMT Schedule D" and "AMT Qualified Dividends and Capital Gains Tax Worksheet", they mean that you use the "regular tax" forms with AMT amounts for the basis of the stock, etc. Mark the form "Alternative Minimum Tax" at the top of the page.

You can't claim you don't know anyone who understands this when you read this FAQ. My telephone number is 408-918-3161.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.