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I have a situation where a client received management

incentive units from the sale...
I have a situation where a client received management incentive units from the sale of a company. He made an 83b election to have the gain treated as a long-term capital gain. He earned $270k in W-2 income, had 1099-DIV $8k, and 1099-B of $2k, Real estate taxes of $3.5k and $637k of long-term capital gains associated with the sale of a company (he is an employee there). He will get a K-1 with the distributions paid. Of the $637k paid, $594 is long-term capital gain and $33k is short-term. He will have to file an extension, but in the meantime, to ensure that he has estimated his payments correctly, how should these be included? Will the long-term capital gains be included in the AMT? I am not familiar with this situation.
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Answered in 2 minutes by:
3/20/2018
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,634
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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My name is***** will assist you today.

Please give me one moment while I review your question and type my initial response

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From what you have described your client doesn't have many items to add back the tax payers income for determining his AMT amount.

The tax payer will be taxed at the top tax bracket for long term capital gains which will be 20% plus 3.8 for Net Investment Income tax.

___

If the tax payer earned $594K in LTCG the tax will be approximately = $141,372.

Short term capital gains of $33K will be taxed at 37% = tax liability of $12,210.

Assuming the tax payer withheld the proper amount from the W2 income, no further payments would be necessary.

___

The additional income from the 1099-Div and 1099-B generally also be taxed at 20% LTCG and 3.8% NII = $2,380

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The total estimated tax payment without considering any of the tax payers possible deductions would be $155,962.00

I have placed a link below to Form 6251 Alternative minim tax, which is the form that will assist you in determining the exact amount owed.

https://www.irs.gov/pub/irs-pdf/f6251.pdf

Please let me know if this has answered your question or if you have any additional questions.

When you have no further questions a positive rating of 5 stars is much appreciated.

Thank you!

Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,634
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
Verified
Chad EA, CDFA®, CFP® and 87 other Tax Specialists are ready to help you
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Customer reply replied 4 months ago
Thank you! Perfect!

Thank you for the rating.

Please let me know if you have any additional questions.

Have a great day.

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