Form 6251 and Form 8801, explained
If you exercise ISOs and hold, these two forms follow you for years. Filing them correctly is how you keep the credit alive.
Form 6251
Alternative Minimum Tax — Individuals. Line 2i carries the ISO exercise adjustment. This form computes your tentative minimum tax and the AMT you owe.
Form 8801
Credit for Prior Year Minimum Tax. It tracks your carryforward and calculates how much you can claim this year.
Keep dual basis records
Your AMT basis in ISO shares differs from your regular tax basis. Losing that record is the most common reason people never recover the credit.
This article is educational and not tax, legal, or financial advice. Talk to a CPA or tax advisor about your specific situation.