Roth Losses: Dual Basis (for AMT) & misc. itemized deduction

[Guest Richard Plant]

An investor recently distributed 100% of his Roth assets (a Roth Conversion IRA invested in internet stocks) in order to claim the "miscellaneous itemized deduction subject to the 2% floor" (subject to AMT). Assume the investor's loss exceeds $150k and his AGI is 75k.

The investor specifically instructed the IRA custodian that the shares in his Roth Conversion IRA be distributed as share certificates (as opposed to taking cash). These two types of IRA distributions should not make a difference on his 1099 or his REGULAR income tax calculation (its still an early distribution subject to the 10% penalty as the assets are less than 5yrs old).

If the investor's "miscellaneous itemized deductions" are large enough to create an AMT, would these stocks have a "DUAL BASIS FOR AMT PURPOSES" similar to that of Incentive Stock Options? Could the dual basis (upon the future sale of the distributed stocks) help the investor reduce future AMT (or increase the investor's AMT Credit in any given year)?

[BPickerCPA]

There is no provision in the law for a dual basis in the circumstances you describe.

ISOs represent a timing difference for AMT. Misc itemized deductions are an exclusion for AMT.