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Tax Law (Questions About Taxes)/IRS form 3800 carryforward requirements


QUESTION: Federal 1040 sole proprietor Schedule C filer, high income, always triggers AMT.  I started a 401k for my small business in 2014 and had >$1000 in startup costs qualifying toward form 8881 $500 credit forwarded to form 3800.  However, business income is $150k too high, so credit for TY2014 is zero.  If I carryforward the credit year by year for the 20 years allowed, I don't ever anticipate credit being allowed due to AMT TMT limiting credit to zero.  So in year 21 I can take a "deduction" (not sure where or how) for this unused credit.  If I elect NOT to ever take this credit, I save $231 on my taxes this year (by expensing $500 of these costs, which is not allowed if credit taken), which probably exceeds the savings from the present year discounted value of a $500 tax credit 21 years from now.  If course, if my business income goes down, I might qualify to take the carryforward credit sooner.

Here is my question:  There is no way this credit is worth my time or trouble if every year for the next 21 years I have to first file an amended prior year tax return to show that I cannot take a carryback, then file another form 3800 with attached statements from tax year 2014 to take a carryforward year after year after year until I can take this future credit.  Is this all necessary to take a carryforward several or many years into the future?  Or am I ignorant and do I only need to file one additional future form 3800 in the year I finally qualify to take the TY2014 credit, and get to omit all the intervening year form 3800's and amended prior year returns?

Thanks for any assistance.

ANSWER: If you make 150k and are in amt...

Either uou live in ct. Mass. Nj.nh. NY or California with high state tax

And you can (and should) hire a cpa.

I have no doubt I can lower your taxes. Regardless of where you live.

Make a new question and mark it private. I will give you my contact info


---------- FOLLOW-UP ----------

QUESTION: No response necessary.

Thanks for taking the time to look this over.  Sorry it is so complex.  I appreciate your offer to offer your professional services.  I may have not made this clear - I do not make $150k, I make $150k above the AMT triggering threshhold.  I would have to make $150k less to avoid the AMT.  You are correct, I live in CA.  Since writing, I have learned that since I would never qualify to apply to a prior year, I would never have to file an amended return.  I also learned that I would indeed have to file a Form 3800 every year for the next 20 years in order to take the deduction in year 21, assuming no change in income and yearly AMT.  I decided that the value of the $500 taken 21 years from now is not worth foregoing $231 in additional expenses this year or the extra form 3800 I would have to file for the next 20 years, and decided not to pursue the credit.

I do appreciate you taking the time to review my question.
No response necessary.
Thanks for your offered professional services, which I will respectfully decline at this time.


There are plenty of strategies which could narrow the amt band - especially if you are a schedule c.  I have three off the top of my head which might help. the first chat is free.

Make a new question and mark it private and I'll provide you with my contact information.  Creative (but legal) is my middle name.


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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

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