Amt capital loss carryforward

[RWG1950]

I started working with a customer in 2014 that had worked in the telecom industry about 20 years ago. She tells me that she had acquired a sizable amount of WorldCom stock (at that time) via an ISO through her former employer that probably caused her to have AMT for the year she exercised her option. The returns are not available. She tells me that she sold her WorldCom stock in about 2002 or 2003 and booked a large long term capital loss on the shares.

Reviewed her 2011, 2012 & 2013 returns when I started working with her. These returns did not have a form 8801 in them. A long term capital loss carryforward of nearly $100,000 was shown on schedule "D" for 2011 (and has been reduced significantly by subsequent yearly capital gain netting).

Her prior 3 returns however also contain a separate "D" headed by "Alternative Minimum Tax" showing an even larger capital loss carryforward. This amount was reduced by her former preparer by yearly capital gain amounts and ultimately each year shows a net loss on the back of the form ("D" AMT) of $3,000 each year - but this loss does not appear anywhere on the return or 6251.

Not sure I understand the significance of this separate "D" for AMT purposes.

Is it simply to track this AMT loss - to be used as a line 17 adjustment on 6251 in a year when she would have AMT ?

Can anyone explain this ? ( thanks for your comments )

[Rapid Robert]

This amount was reduced by her former preparer by yearly capital gain amounts and ultimately each year shows a net loss on the back of the form ("D" AMT) of $3,000 each year - but this loss does not appear anywhere on the return or 6251.

Not sure I understand the significance of this separate "D" for AMT purposes.

Is it simply to track this AMT loss - to be used as a line 17 adjustment on 6251 in a year when she would have AMT ?

It is to track the AMT loss carryover, but that does not mean there is an adjustment for any year subject to AMT. If in a given year her regular tax cap loss was $3K and her AMT cap loss was also $3K, there would be no adjustment to show on the AMT form for that year. The adjustment on 6251 would only show up in a year where there was a disposition of an asset that had a different basis for AMT than it did for regular tax, or a year when the regular carryover loss was used up but the AMT carryover loss was not (or vice versa).

You mention Form 8801 -- this regular tax credit was probably used up in the several years after the ISO exercise, assuming the taxpayer was not regularly subject to AMT.

[RWG1950]

It is to track the AMT loss carryover, but that does not mean there is an adjustment for any year subject to AMT. If in a given year her regular tax cap loss was $3K and her AMT cap loss was also $3K, there would be no adjustment to show on the AMT form for that year. The adjustment on 6251 would only show up in a year where there was a disposition of an asset that had a different basis for AMT than it did for regular tax, or a year when the regular carryover loss was used up but the AMT carryover loss was not (or vice versa).

You mention Form 8801 -- this regular tax credit was probably used up in the several years after the ISO exercise, assuming the taxpayer was not regularly subject to AMT.

so it is correct to keep this AMT capital loss carryforward on its own separate "D" and continue to reduce it by $ 3,000 yearly ? ( assuming the taxpayer does not incur AMT for the tax year )

she has also been showing a net $ 3,000 regular "D" capital loss (after netting) on her 1040.

[Rapid Robert]

so it is correct to keep this AMT capital loss carryforward on its own separate "D" and continue to reduce it by $ 3,000 yearly ? ( assuming the taxpayer does not incur AMT for the tax year )

Based on what you've stated, yes. As long as the annual gain or loss amounts are the same in a given year, there would be no adjustment for this item on Form 6251.