AMT - Form 6251

[pc@paulcohenconsultants]

A taxpayer exercised Incentive Stock Options (ISO's) in 2014 and sold the stocks purchased in the same year.
The entire gain was included in the taxpayers' W-2 together with the applicable withholding tax. Schedule D
reflected the sales price and the cost with no gain or loss.

The question I have is if any entry is required to be made on Form 6251 and if yes, what line should the entry be
made?

[DaveinTexas]

Caution

Be very careful when preparing returns with this type of transaction. I'm not saying the transaction isn't transparent; just make sure you ask all of the pertinent questions (due diligence) related to the sale.

I would acquire company documents (pay stub reporting the same day sale) along with the brokerage statement from the firm that facilitated the sale, etc, etc.

When the employee exercises and sells the stock in the same transaction so he doesn't have to come up with the cash, then the transaction is more than likely reported (the gain) on the employee's W2.

If the employee exercises and holds or relinquishes old shares to pay the taxes (swap), you have a different animal. When they exercise and hold, the employee must report the difference in the stock's fair market value at the time of the exercise and the cost (strike price) at the time of the grant. This difference, called the Bargain Element, is then reported as income on the Form 6251, line 14 for 2014.

It doesn't appear, from your post, that you will have anything to report on line 14 of the 6251 but make sure you understand the complete transaction that occurred. Exercising and holding means the employee has to come up with the cash (this is where a swap or relinquish of other shares comes into play). If this is what happened, then you need more details to the transaction. The 1099-B will NOT tell the whole story. The pay stub or payroll summary for the payroll period when the transaction occurred will be handy in figuring out exactly what went happened.

I hope that helps.

[Roland Slugg]

No. Since the entire gain was reported on his W-2, there is no AMT preference to report on F-6261.

If he had not made a disqualifying disposition (triggering immediate ordinary income), but had made a §83(b) election, to report the stock's value currently, than there would be a reportable AMT preference in the year he received the stock. Based on the facts presented in your post, however, that is not the case, so there is no AMT to report.

[Burke]

A taxpayer exercised Incentive Stock Options (ISO's) in 2014 and sold the stocks purchased in the same year.
The entire gain was included in the taxpayers' W-2 together with the applicable withholding tax. Schedule D
reflected the sales price and the cost with no gain or loss.

The question I have is if any entry is required to be made on Form 6251 and if yes, what line should the entry be
made?

Roland is correct. When ISO's are exercised and sold in the same year, there is no AMT implication. However, IMO, there should probably have been a small loss shown on Schedule D representing the commissions/fees charged by the broker/seller. There usually is a cost.