Incorrect AMT Capital Loss Carryover

[David55NN]

Hi @ishmayel , could you see the following thread, where myself and some other folks seem to think it's resolved:

https://ttlc.intuit.com/community/taxes/discussion/2022-schedule-d-capital-loss-carryover-worksheet-...

I think mine is okay, but it would be important to hear otherwise.

If you wanted to continue the above thread and be more specific about the issue you're seeing, the Turbotax staff and others might be able to help.

[ishmayel]

Hi, thanks for your reply.  I will try to see what I've got, and am confused about why I'm also seeing AMT calculations when I'm never subject to AMT.  I've never even considered carryover vs. carry forward???  Usually, I've trusted TT, but maybe I just haven't been paying attention.

Here in central California I've got rain and flooding to contend with, so it may be a couple days before I can look at the link and get this capital loss carryover issue clear.

[ishmayel]

On my returns, I have never had AMT triggered.  However, every year back to at least 2019, shows marked differences between the numbers for "regular" taxes and for "AMT".  But, it looks like TT is pulling the correct data to generate the capital loss carryovers for each, and the issue that started this thread does seem to be fixed.

My dilemma now is to figure why there is a large difference between "regular" and AMT capital loss carryover numbers.  I've never paid much attention, because I don't have any transactions that should trigger AMT.  But, since the IRS has never brought it up, I don't guess it is a problem, and my actual taxes do not seem to be affected.

[HopeS]

There are various items that are treated differently for AMT tax purposes vs regular tax. You may want to review your prior year's returns to see if any of these differences were reflected on your Form 6251.

Line 2b: Tax Refund: If you have a taxable state tax refund on your regular tax return, you get to remove it from your income for AMT purposes because you do not receive a corresponding deduction for state taxes under the AMT.
 

Line 2c: Investment interest: The investment interest deduction may be different for AMT purposes because it depends on whether you have taxable private activity bond interest (see line 12). If you do, you may have an additional deduction for investment interest.

Line 2i: Incentive stock options: This line is another common problem for people affected by AMT. If you exercise an Incentive Stock Option (ISO) but do not sell the stock in the year of exercise, the transaction is not taxable that year for regular tax purposes. 

However, the difference between the exercise price and the fair market value of the stock on the day of the exercise is an adjustment for AMT purposes and appears on Line 15. For many people, this adjustment can be a very large number. Essentially, you are going to be taxed on a hypothetical profit (what you might have made if you sold the stock on the day you bought it.)

See the attached guidance for more information:

Alternative Minimum Tax 
 

@ishmayel 

[Rahbapna123]

I am reviewing my 2022 return and running into the same issue - TurboTax is showing a big positive number as disposition of property (sale of stock) but not adjusting for the large carryover loss from previous years which should offset the gains - looks like a bug in the software and it doesn't show the worksheet where the numbers are being pulled from - i had talked to TTax rep on the phone and she could not figure it out either...what are my options to fix it?

[ishmayel]

Sorry, but I don't have any great ideas.  However, you might check to be sure that your capital loss carryovers are being applied to either short or long-term gains.  If the carryover is for long-term losses, it must be applied to current long-term gains.  Same for short term losses/gains.  Then, you end up with an overall capital gain or loss.  Also, I think I've seen losses on some forms shown as having a minus sign (-), or sometimes a positive number in (parentheses).  Can be confusing.  Good luck.

[mdili-aol-com]

Unfortunately I discover after filing 2021 return that TT failed to produce a Capital Gains and Losses schedule D in 2021 tax return.  It would have shown the net long-term capital loss carryover and deduction of 3K from the current year (2021) gross income. I had to file an amended return afterwards (also by TT).  Since it was my first time with TT, I don't know if TT always has the programming flaw or it only happened in 2021.

[kkmrhktax]

I hope this message isn't too confusing.

I use desktop TT Deluxe. For what it's worth, in the TT 2019  Capital Loss Carry Forward Worksheet, the short term loss for regular and AMT is the same and I had no long term carry forward loss. 

In the TT2020 Capital Loss Carryforward Worksheet, the regular short term loss is correct and the AMT short term loss is incorrect. The regular long term loss is correct and the long term AMT loss is incorrect.

In the TT2021 Capital Loss Carryforward Worksheet, the regular short term loss is correct and the short term AMT loss is incorrect. The regular long term loss is correct and the long term AMT loss is incorrect. 

In the TT2022 Capital Loss Carry Forward Worksheet, the regular short term loss is correct and the short term AMT loss is incorrect. The regular long term loss is correct and the long term AMT loss is incorrect.

For fun, I looked at the 2021 Capital Carry Loss Carryforward Worksheet and compared it to the 2022 Capital Loss Carryover Worksheet; the regular short term losses are correct and the same, but the AMT short term losses are incorrect and different between the two worksheets.

I'm not finished with 2023 taxes in TT2023;  I manually changed the AMT short term carry forward loss from 2022 to agree with the regular short term carry forward loss as recommended. Also, I looked at the TT2023 Capital Carryforward worksheet and the regular short term and long term losses are correct and match the AMT short term and long term losses. This appears to be good news. 

I've never been subjected to AMT, but I'm trying to understand the AMT system as I might take some large, long term capital gains in 2024.

Side note, over the years, I've been developing an Excel workbook, where I try to mimic the federal tax forms that I use. I use the workbook to compare to TT. Also, 2023 is the first year I've used the annualized income method, as I stopped working and transferred some IRA funds to a Roth IRA in the fourth quarter of 2023, so my income is uneven during the year.  I'll see how my annualized income worksheets compare to TT2023 when I enter annualized info.

[mportale]

They must have figured out that there was an error in how they did the 2021 AMT carryforward calc.  On the worksheet for the 2023 return it has a yes/no on whether this return was impacted (mine was).  Then they have a lengthy calculation where they show the original and corrected 2021 AMT numbers.  I'll be honest, it's difficult for me to follow and I'm going to take it on faith that they have it right now.

[HardtoKeepUp]

That's exactly what they did.  They found the error for 2021, and realized it would pancake forward into 2023, so they ask to confirm the correct 2021 carryforward loss values off your 2021 tax return (AMT Form - 6251)

Sure would have been nice if this error was announced more prominently.  Without question many people will be overpaying their tax, as they'll have AMT they don't deserve, but will not check carefully to avoid this.