I'd like to get some feedback from the group to correct me if I'm doing anything wrong in accounting for worthless stock from an ISO exercise.
In 2012 I exercised 35,000 ISO shares with a strike price of $0.10 per share. At that time the FMV of the stock was $0.52 per share. On my 2012 schedule D I recorded no regular capital gain. On my 2012 AMT I had $14700 of income related to this on the ISO line of the AMT form and I paid AMT that year.
In 2013 I held the underlying stock (company was still private). On my 2013 taxes I filled out form 8801 which generated a credit carryforward to my 2014 taxes.
Now we arrive in 2014 and the private company has failed and all stock is worthless. I want to check that I handle this correctly on my 2014 taxes. What I believe I need to do is:
- On my 2014 schedule D I have a long term capital loss of 00 (which is the 35,000 shares * 1. On my 2014 schedule D I have a long term capital loss of $3500 (which is the 35,000 shares * $0.10 per share). I have other unrelated long term capital gains of $5K for 2014 so the entire $3500 loss will be accounted for in 2014 and I won't be carrying anything forward related to this..10 per share). I have other unrelated long term capital gains of K for 2014 so the entire 00 loss will be accounted for in 2014 and I won't be carrying anything forward related to this.
- I fill out (but don't submit) an AMT schedule D. Here is where I get confused. Due to the fact that the stock became worthless I should have a total negative adjustment to my AMT income of 700. However I believe that this has to be capped at 00, so this means that on my 2014 AMT I need to put (00) on line 17 and then carry the remaining 700 loss forward for future years.
- Continue to fill out form 8801 until carryforward credit is consumed.
Is the above correct?
I just want to make sure that my line 17 AMT adjustment for 2014 is capped at ($3000) for this case and NOT something like ($5000) since I did have long term cap gains in that amount.
Thanks - Richard