Can I apply all my capital losses to capital gains?

August 15, 2005

Subject:  ATM - Capital Losses
From:  Mark
Date:  Mon, 01 Aug 2005

I have a large capital loss being carried forward since 2002. Can I apply all this loss to any capital gains this year if I am subject to the alternative minimum tax? Does the AMT restrict me from subtracting capital losses from capital gains? All of my gains are long term and I have no incentive stock option shares.

Mark

Answer

Date:  Mon, 08 Aug 2005

In the situation you describe, the Schedule D should be identical for regular and AMT reporting, and the current gains can be reduced by the capital loss carryover.

Be aware that tax basis can sometimes be different for regular tax and AMT reporting. As you pointed out, a common difference is for ISO shares, for which the tax basis is the fair market value on which any AMT adjustment is based (generally at date of exercise or the vesting date). Another example is the tax basis of a partnership or S corporation interest for which there are depreciation adjustments for AMT reporting.

Good luck!
Mike Gray

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