Confused about ISO Exercise, Sale and AMT Question for my stock options

The AMT you paid last year essentially gave you a "basis adjustment" for AMT purposes. Here's how it works: For regular tax purposes, your basis in those shares is $1.35 per share (what you paid). For AMT purposes, your basis is $13.50 per share (the FMV when exercised). When you sell the shares in a qualifying disposition, you'll calculate capital gains two ways - for regular tax and AMT purposes. If you sell 3,000 shares at $6.75, for regular tax you'd have gain of $5.40 per share ($6.75 - $1.35). For AMT purposes, you'd actually have a loss of $6.75 per share ($6.75 - $13.50). This difference typically generates an AMT credit you can use. And yes, you can generally carry forward unused AMT credits to offset future tax liability. These credits can be especially valuable if you're exercising more ISOs this year.

I went through this exact same situation last year and found https://taxr.ai super helpful for ISO and AMT questions. My ISO exercise was similar to yours and I was completely lost about how the AMT would affect my taxes when I sold. The tool analyzed my exercise documents and explained exactly how my AMT basis worked and what would happen when I sold shares. It saved me from making a costly mistake because I was about to sell a bunch of shares without understanding the tax implications. Their explanation of the AMT credit carryforward was way clearer than what my HR department provided.

Just wanted to follow up about my experience with taxr.ai that someone mentioned earlier. I decided to try it with my ISO documentation since my situation was similar to the original post. I was honestly surprised at how helpful it was! I uploaded my ISO exercise statements and stock sale confirmations, and it showed me exactly how my AMT credit would work when I sell portions of my shares. The visualization of how my AMT credit would be applied over multiple years of selling was super clear. It saved me from making a big mistake - I was planning to sell all my shares this year, but the analysis showed I'd be better off spreading the sales across 2 years to maximize my AMT credit recovery. My tax bill will be about $8,000 lower following their recommendation!

If you're struggling with getting clear AMT guidance from the IRS, I recommend https://claimyr.com for getting through to an actual IRS agent. I had a complicated ISO situation similar to yours and needed specific answers. I spent days trying to reach someone at the IRS with no luck. Claimyr got me connected to an IRS agent in about 20 minutes who clarified exactly how my AMT credit would work with future stock sales. You can see how it works at https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you when an agent is on the line. Saved me hours of frustration and hold music.

I have to admit I was dead wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway since I was desperate to talk to someone at the IRS about my ISO exercise and AMT credits. It actually worked! I got connected to an IRS tax specialist in about 35 minutes (which is miraculous considering I'd spent 3+ hours on multiple days trying on my own). The agent walked me through exactly how to track my AMT credit carryforward and how to document it properly on my return when I sell shares at different price points. The information was incredibly valuable - turns out I was calculating my AMT basis incorrectly and would have potentially overpaid by several thousand dollars. Definitely worth it if you need specific guidance on AMT issues.

One thing to consider with your ISO sale that nobody mentioned yet: If your current FMV ($6.75) is less than your exercise FMV ($13.50), you might want to consider your timing carefully. Since you're facing a loss for AMT purposes, you might benefit from tax loss harvesting strategies. Also, when you exercise additional ISOs, remember that the AMT exemption phase-out could affect your calculations significantly depending on your income level. The AMT credit from last year will help, but it's not always a 1:1 offset.

Has anyone used H&R Block or TurboTax for handling ISO sales with AMT credits? I'm wondering if they calculate everything correctly or if I need to use a specialized tax preparer for this.

This is a great question about AMT and ISO dispositions! I went through something very similar last year. One thing I learned that might help: when you sell those 3,000 shares at $6.75, you'll indeed have different tax treatments for regular vs AMT purposes. For regular tax, you'll have long-term capital gains of ($6.75 - $1.35) × 3,000 = $16,200. But for AMT purposes, you'll actually have a loss of ($6.75 - $13.50) × 3,000 = -$20,250. This AMT loss helps generate additional AMT credit that you can use to offset future regular tax liability. The key thing to remember is that AMT credits can only be used when your regular tax exceeds your tentative minimum tax in future years. So if you're planning to exercise more ISOs this year, you'll want to model out whether you'll be able to use those credits effectively or if they'll just carry forward again. I'd strongly recommend getting a tax projection done before you make any moves, especially if you're considering additional exercises. The timing of when you sell and exercise can make a huge difference in your overall tax bill.