Employee stock options led to AMT, later liquidated below strike price - what deductions can I claim?

Thanks for the clear explanation! If I file an amended return for 2022, will I need to also amend my 2023 return? I've already filed that one too without claiming any AMT credit. Also, for the capital loss calculation - just to confirm, even though I never actually paid $13.50 per share (I only paid the $2.75 strike price), my basis is still considered $13.50 because that's what I was taxed on for AMT purposes?

Yes, you should also file an amended return for 2023 if you would have been eligible to use some of the AMT credit that year. The process is sequential - first establish the credit with the 2022 amended return, then claim any applicable portion on 2023. Correct about the basis. Even though you only paid $2.75 out of pocket, the tax code treats you as if you paid the full $13.50 because you were taxed on the spread between strike price and FMV when you exercised. The IRS doesn't want to tax you twice on the same income, so they give you basis for amounts already taxed. This is actually the silver lining in your situation - you get to claim a larger capital loss than if your basis was just the strike price.

Did it actually work for amended returns? I've got a similar situation with ISOs from 2021 and didn't realize I could claim any credits. How far back can you go to claim these AMT credits?

I'm skeptical of these online tools for complex tax situations. How does it compare to just using a CPA who specializes in equity compensation? My concern is that it might miss something or not be updated for recent tax law changes.

It definitely worked for amended returns. I was able to go back and claim AMT credits from two years ago. The AMT credit actually carries forward indefinitely until you can use it, so technically there's no limit to how far back you can go, though you'll need to amend returns within the standard amendment window (generally 3 years from the original filing date). The tool is actually more comprehensive than the CPA I was using. That's the problem I ran into - many CPAs don't specialize in equity compensation and AMT issues. The taxr.ai system is constantly updated with tax law changes and specifically designed to handle these complex equity scenarios. It flagged several issues my CPA missed and saved me thousands. You can still have a professional review the output if you want an extra layer of verification.

Wait, how does this actually work? Does it just call the IRS for you? I've been trying to get through for days about correcting an AMT issue from last year.

This seems too good to be true. The IRS phone system is notoriously impossible. What's the catch here? I've literally never been able to reach a human at the IRS despite trying everything.

It doesn't just call for you - it actually navigates the entire IRS phone tree and waits on hold on your behalf. Then when a real human IRS agent picks up, you get a call connecting you directly to them. No more waiting on hold for hours. There's no catch - it's simply using technology to solve the hold time problem. The service monitors the call and when a human answers, it immediately calls you and connects the calls together. I was skeptical too until I tried it. You can literally check the status of your place in line and estimated wait time while it's working. For AMT issues specifically, getting to talk to a real person made all the difference in making sure my amended return was done correctly.

Thanks for bringing up the timing issue. I'll definitely get on those amended returns right away. Do you know if there's any penalty for filing amended returns simply to claim credits I missed? Or is it just a matter of potentially leaving money on the table if I wait too long?

There's typically no penalty for filing amended returns to claim additional credits you were entitled to but missed. The IRS actually encourages taxpayers to file amended returns if they discover they've paid too much tax. The only real penalty is potentially losing out on the money if you wait beyond the 3-year window. Also worth noting that if you're due a refund, the IRS generally doesn't pay interest on refunds if you file the amended return within 3 years of the original filing date. If you're really close to that deadline, it becomes more urgent.

For Form 8949, you'd report this with adjustment code B "Basis as reported to the IRS on Form 1099-B does not reflect the impact of the AMT adjustment. Taxpayer is increasing the basis by the income recognized under AMT." That's assuming your 1099-B shows only your original cost (strike price paid). If no 1099-B was issued because it was a private company acquisition, you'd use code L for "Other adjustment" and include an explanation. In either case, your basis should be the strike price plus the amount included in AMT income.