2010 Instructions for Form 6251 Alternative Minimum Tax Individuals

Transcription

1 This form is referenced in an endnote at the Bradford Tax Institute. CLICK HERE to go to the home page Instructions for Form 6251 Alternative Minimum Tax Individuals Department of the Treasury Internal Revenue Service Section references are to the Internal you do complete another form, do not Optional Write-Off for Revenue Code unless otherwise noted. attach it to your tax return, but keep it Certain Expenditures for your records. However, you may General Instructions have to attach an AMT Form 1116, There is no AMT adjustment for the Foreign Tax Credit, to your return; see following items if you elect for the What s New the instructions for line 32 that begin on regular tax to deduct them ratably over The exemption amount has page 9. the period of time shown. increased to $47,450 ($72,450 if Circulation expenditures 3 years For the regular tax, some deductions married filing jointly or qualifying (section 173). and credits may result in carrybacks or widow(er); $36,225 if married filing Research and experimental separately). carryforwards to other tax years. expenditures 10 years (section If you received a Form 3921, it may Examples are investment interest 174(a)). help you figure any adjustment for expense, a net operating loss, a capital Mining exploration and development incentive stock options on line 14. See loss, a passive activity loss, and the costs 10 years (sections 616(a) and the line 14 instructions. foreign tax credit. Because you may 617(a)). have to refigure these items for the Intangible drilling costs 60 months AMT, the carryback or carryforward (section 263(c)). Who Must File amount may be different for the AMT Attach Form 6251 to your return if any For information on making the than for the regular tax. Your at-risk of the following statements is true. election, see section 59(e) and limits and basis amounts also may 1. Form 6251, line 31, is greater Regulations section Also see differ for the AMT. Therefore, you must than line 34. Pub keep records of these different 2. You claim any general business amounts. credit, and line 8 or line 24 of Form 3800 is more than zero. Specific Instructions 3. You claim the qualified electric Partners and Shareholders vehicle credit, the personal use part of the alternative fuel vehicle refueling property credit, or the credit for prior If you are a partner in a partnership or a year minimum tax. shareholder in an S corporation, see 4. The total of Form 6251, lines 8 Schedule K-1 and its instructions to through 27, is negative and line 31 figure your adjustments or preferences would be greater than line 34 if you did from the partnership or S corporation to not take into account lines 8 through include on Form Purpose of Form Use Form 6251 to figure the amount, if any, of your alternative minimum tax (AMT). The AMT applies to taxpayers who have certain types of income that receive favorable treatment, or who Nonresident Aliens If you are a nonresident alien and you disposed of U.S. real property interests at a gain, you must make a special computation. Fill in Form 6251 through line 30. If your net gain from the disposition of U.S. real property If you owe AMT, you may be TIP able to lower your total tax (regular tax plus AMT) by claiming itemized deductions on Form 1040, even if your total itemized deductions are less than the standard deduction. This is because the standard deduction (except the part due to a net disaster loss or sales or excise tax on the purchase of a new motor vehicle) is not allowed for the AMT and, if you claim the standard deduction on Form 1040, you cannot claim itemized deductions for the AMT. Part I Alternative qualify for certain deductions, under the interests and the amount on line 28 are tax law. These tax benefits can Minimum Taxable both greater than the tentative amount significantly reduce the regular tax of you figured for line 30, replace the Income (AMTI) some taxpayers with higher economic amount on line 30 with the smaller of incomes. The AMT sets a limit on the that net gain or the amount on line 28. To avoid duplication, any amount these benefits can be used to Also, enter RPI on the dotted line next! adjustment or preference for line reduce total tax. to line 30. Otherwise, do not change 5, 19, or 20 or for a tax shelter Also use Form 6251 to figure the tax line 30. farm activity on line 27 must not be liability limit on the credits listed under taken into account in figuring the amount to enter for any other Who Must File. Credit for Prior Year adjustment or preference. Recordkeeping Minimum Tax Line 1 For the AMT, certain items of income, deductions, etc., receive different tax treatment than for the regular tax. Therefore, you need to refigure items for the AMT that you figured for the regular tax. In some cases, you may wish to do this by completing the applicable tax form a second time. If See Form 8801, Credit for Prior Year Minimum Tax Individuals, Estates, and Trusts, if you paid AMT for 2009 or you had a minimum tax credit carryforward on your 2009 Form If you pay AMT for 2010, you may be able to take a credit on Form 8801 for Cat. No P If Form 1040, line 43, includes a write-in amount (such as a capital construction fund deduction for commercial fishermen), adjust line 1 by the write-in amount. Form 1040NR. If you are filing Form 1040NR, enter the amount from Form

2 Home Mortgage Interest Adjustment Worksheet Line 4 Keep for Your Records Line 5 Miscellaneous Deductions If you are filing Form 1040NR, enter the amount from Schedule A (Form 1040NR), line Enter the total of the home mortgage interest you deducted on lines 10 through 12 of Schedule A (Form 1040) and any mortgage insurance premiums you deducted on line 13 of Schedule A (Form Line 7 Refund of Taxes 1040) Include any refund from Form 1040, 2. Enter the part, if any, of the interest included on line line 10 (or Form 1040NR, line 11), that 1 above that was paid on an eligible mortgage is attributable to state or local income (defined on this page). Include any mortgage taxes. Also include any refunds insurance premiums included on line 1 above that received in 2010 and included in were paid in connection with an eligible mortgage 2. income on Form 1040, line 21, that are 3. Enter the part, if any, of the interest included on line attributable to state or local personal 1 above that was paid on a mortgage whose property taxes or general sales taxes, proceeds were used in a refinancing (including a foreign income taxes, or state, local, or second or later refinancing) of an eligible mortgage. foreign real property taxes. Enter the Include any mortgage insurance premiums included total as a negative amount. If you on line 1 above that were paid in connection with include an amount from Form 1040, line such a mortgage. Do not include any interest paid 21, you must enter a description and on (or any mortgage insurance premiums paid in the amount next to the entry space for connection with) the part of the balance of the new line 7. For example, if you include a mortgage that exceeded the balance of the original refund of real property taxes, enter real eligible mortgage immediately before it was property and the amount next to the refinanced (or, if smaller, the balance of any prior entry space. refinanced mortgage immediately before that mortgage was refinanced) Line 8 Investment Interest 4. Enter the part, if any, of the interest included on line If you filled out Form 4952, Investment 1 above that was paid on a mortgage: Interest Expense Deduction, for your Taken out before July 1, 1982, and regular tax, you will need to fill out a Secured, at the time the mortgage was taken out, second Form 4952 for the AMT as by your main home or a qualified dwelling used by follows. you or your family (see definitions on this page). Step 1. Follow the Form 4952 Do not include any amount entered on line 2 or line instructions for line 1, but also include 3 above the following amounts when completing 5. Add lines 2 through line Subtract line 5 from line 1 and enter the result on Form 6251, line Any interest expense on Form 6251, line 4, that was paid or accrued on indebtedness attributable to property 1040NR, line 39. If less than zero, enter Qualified dwelling. A qualified held for investment within the meaning as a negative amount. dwelling is any house, apartment, of section 163(d)(5) (for example, condominium, or mobile home not used interest on a home equity loan whose Line 3 Taxes on a transient basis. proceeds were invested in stocks or Enter the amount of all taxes from bonds). Schedule A (Form 1040), lines 5, 6, Family. Family includes only your Any interest that would have been and 8, except any generation-skipping brothers and sisters (whether by whole deductible if tax-exempt interest on transfer taxes on income distributions. private activity bonds were includible in or half blood), your spouse, your gross income. Do not include any new motor ancestors, and your lineal descendants. Step 2. Enter your AMT disallowed vehicle taxes from Schedule A, line 7. Example. In 2010, Dave and investment interest expense from 2009 Form 1040NR. If you are filing Form on line 2. Complete line 3. Jennifer paid $10,000 in interest on a 1040NR, enter the amount of all taxes mortgage they took out to buy their Step 3. When completing Part II, from Schedule A (Form 1040NR), line home (an eligible mortgage). In May refigure the following amounts, taking 3, except any generation-skipping 2010, they refinanced that mortgage into account all adjustments and transfer taxes on income distributions. and paid $9,000 in interest through the preferences. Gross income from property held for Line 4 Home Mortgage rest of the year. The balance of the new investment. mortgage is the same as the balance of Interest Adjustment Net gain from the disposition of the old mortgage. In July 2010, they Complete the worksheet on this page to property held for investment. obtained a home equity loan on their figure your home mortgage interest Net capital gain from the disposition home and used the proceeds to buy a adjustment. The definitions of certain of property held for investment. terms used in the worksheet are as new car. They paid $5,000 in interest Investment expenses. follows. on the home equity loan in They Include any tax-exempt interest enter the following amounts on the income from private activity bonds and Eligible mortgage. An eligible Home Mortgage Interest Adjustment any investment expenses that would mortgage is a mortgage whose Worksheet: $24,000 on line 1 ($10,000 have been deductible if the interest on proceeds were used to buy, build, or plus $9,000 plus $5,000), $10,000 on the bonds were includible in gross substantially improve your main home line 2, $9,000 on line 3, $ -0- on line 4, income for the regular tax. or a second home that is a qualified dwelling. A mortgage whose proceeds were used to refinance another mortgage is not an eligible mortgage. $19,000 on line 5 ($10,000 plus On line 4g, enter the smaller of: $9,000), and $5,000 on line 6 ($24, The amount from line 4g of your minus $19,000). regular tax Form 4952, or -2- Instructions for Form 6251 (2010)

3 2. The total of lines 4b and 4e of Your ATNOL for a loss year is the b. 100% of AMTI for the tax year this AMT Form excess of the deductions allowed for (figured without regard to the ATNOLD Step 4. Complete Part III. figuring AMTI (excluding the ATNOLD) and any domestic production activities over the income included in AMTI. deduction, as discussed earlier) Enter on Form 6251, line 8, the Figure this excess with the reduced by the amount determined difference between line 8 of your AMT modifications in section 172(d), taking under (1). Form 4952 and line 8 of your regular into account your AMT adjustments and tax Form If your AMT expense is preferences (that is, the section 172(d) Enter on line 11 the smaller of the greater, enter the difference as a modifications must be separately ATNOLD or the ATNOLD limitation. negative amount. figured for the ATNOL). For example, Any ATNOL not used may be carried Investment interest expense that is the limitation of nonbusiness back 2 years or forward up to 20 years not an itemized deduction. If you did deductions to the amount of (15 years for loss years beginning not itemize deductions and you had nonbusiness income must be before 1998). In some cases, the investment interest expense, do not separately figured for the ATNOL, using carryback period is longer than 2 years; enter an amount on Form 6251, line 8, only nonbusiness income and for details, see Pub See Pub. unless you reported investment interest deductions that are included in AMTI A for the part of an ATNOL that is expense on Schedule E. If you did, a qualified recovery assistance loss or Your ATNOLD may be limited. To follow the steps above for completing Pub B for the part of an ATNOL figure the ATNOLD limitation, you must Form Allocate the investment that is a qualified disaster recovery first figure your AMTI without regard to interest expense allowed on line 8 of assistance loss. If you elect to carry the ATNOLD and any domestic the AMT Form 4952 in the same way back a 2008 or 2009 ATNOL 5 years production activities deduction. To do you did for the regular tax. Enter on under section 172(b)(1)(H) as amended this, first figure a tentative amount for Form 6251, line 8, the difference by Public Law , the 50% taxable line 9 by treating line 11 as if it were between the amount allowed on income limit under section zero. Next, figure a tentative total of Schedule E for the regular tax and the 172(b)(1)(H)(iv) is applied separately lines 1 through 27 using the tentative amount allowed on Schedule E for the based on the previously-determined line 9 amount and treating line 11 as if AMT. AMTI for that carryback year. In other it were zero. Add any domestic words, the ATNOLD in that 5th Line 9 Depletion production activities deduction to this preceding year is limited to 50% of your tentative total. Your ATNOLD is You must refigure your depletion AMTI for that year, which is determined limited to 90% of the result. deduction for the AMT. To do so, use without using the ATNOL for the loss only income and deductions allowed for However, the 90% limit does not year or any later tax year. the AMT when refiguring the limit based apply to an ATNOL that is attributable The treatment of ATNOLs does not on taxable income from the property to qualified disaster losses (as defined affect your regular tax NOL. under section 613(a) and the limit in section 172(j)), qualified Gulf based on taxable income, with certain Opportunity Zone losses (as defined in Since ATNOLs arising in loss adjustments, under section 613A(d)(1). section 1400N(k)(2)), qualified recovery! years beginning before 1998 Also, your depletion deduction for assistance losses (as defined in Pub. can be carried forward no more mines, wells, and other natural deposits 4492-A, Information for Taxpayers than 15 years, you cannot carry forward under section 611 is limited to the Affected by the May 4, 2007, Kansas to 2010 an ATNOL from a loss property s adjusted basis at the end of Storms and Tornadoes), qualified beginning before the year, as refigured for the AMT, disaster recovery assistance losses (as Note. If you elected under section unless you are an independent defined in Pub B, Information for 172(b)(3) to forgo the carryback period producer or royalty owner claiming Affected Taxpayers in the Midwestern for the regular tax, the election also percentage depletion for oil and gas Disaster Areas), or a 2008 or 2009 loss applies for the AMT. wells under section 613A(c). Figure this that you elected to carry back more limit separately for each property. When than 2 years under section Line 12 Interest From refiguring the property s adjusted basis, 172(b)(1)(H). Therefore, if an ATNOL Private Activity Bonds take into account any AMT adjustments that is carried back or carried forward to Enter on line 12 interest you earned on you made this year or in previous years the tax year is attributable to any of specified private activity bonds that affect basis (other than current those losses, the ATNOLD for the tax reduced (but not below zero) by any year depletion). year is limited to the sum of: deduction that would have been Enter the difference between the 1. The smaller of: allowable if the interest were includible regular tax and AMT deduction. If the a. The sum of the ATNOL in gross income for the regular tax. AMT deduction is greater, enter the carrybacks and carryforwards to the tax Each payer of this type of interest difference as a negative amount. year attributable to net operating losses should send you a Form 1099-INT other than those losses described in 2a showing the amount of this interest in Line 10 Net Operating Loss below, or box 9. Deduction b. 90% of AMTI for the tax year Generally, the term specified private If you are filing Form 1040NR, enter (figured without regard to the ATNOLD activity bond means any private activity your net operating loss deduction from and any domestic production activities bond (as defined in section 141) the Form 1040NR, line 21, as a positive deduction, as discussed earlier), plus interest on which is not includible in amount. 2. The smaller of: gross income for the regular tax, if the bond was issued after August 7, 1986, Line 11 Alternative Tax Net a. The sum of the ATNOL and before See section 57(a)(5) Operating Loss Deduction carrybacks and carryforwards to the tax for exceptions and more details. year attributable to qualified disaster (ATNOLD) losses, qualified Gulf Opportunity Zone Do not include interest on qualified The ATNOLD is the sum of the losses, qualified recovery assistance Gulf Opportunity Zone bonds described alternative tax net operating loss losses, qualified disaster recovery in section 1400N(a) or qualified (ATNOL) carryovers and carrybacks to assistance losses, and any 2008 or Midwestern disaster area bonds. the tax year, subject to the limitation 2009 loss that you elected to carry back Exempt-interest dividends paid by a explained later on this page. Figure more than 2 years under section regulated investment company are your ATNOLD as follows. 172(b)(1)(H), or treated as interest income on specified Instructions for Form 6251 (2010) -3-

4 private activity bonds to the extent the Form If you received a Form the amount of your gains and losses dividends are attributable to interest on 3921, it may help you figure your may be different for the AMT, the the bonds received by the company, adjustment. amount of any capital loss carryover minus an allocable share of the Example. You exercised an ISO to also may be different for the AMT. See expenses paid or incurred by the acquire 100 shares of stock in the example that begins below. To company in earning the interest. This Your rights in the acquired stock first figure your AMT capital loss carryover, amount should also be reported to you became transferable on the date you fill out an AMT Capital Loss Carryover on Form 1099-INT in box 9. exercised the ISO and were not subject Worksheet in the Schedule D If you are filing Form 8814, Parents to a substantial risk of forfeiture. You instructions. Election To Report Child s Interest and did not pay anything for the ISO. You For each of the four items listed Dividends, any tax-exempt interest did not sell the acquired stock during earlier, figure the difference between income from line 1b of that form that is You received a Form 3921 that the amount included in taxable income a preference item must be included on shows $10 in box 3 (the exercise price for the regular tax and the amount this line. you paid for each share), $25 in box 4 included in income for the AMT. Treat (the fair market value of each share), the difference as a negative amount if Line 13 Qualified Small and 100 shares in box 5. To figure your (a) both the AMT and regular tax Business Stock adjustment, multiply the amount in box amounts are zero or more and the AMT 4, $25, by the 100 shares in box 5. The If you claimed the exclusion under amount is less than the regular tax result is $2,500, the fair market value of section 1202 for gain on qualified small amount or (b) the AMT amount is a all the shares. Then multiply the business stock held more than 5 years, loss, and the regular tax amount is a amount in box 3, $10, by the 100 multiply the excluded gain (as shown smaller loss or is zero or more. shares in box 5. The result is $1,000, on Schedule D (Form 1040)) by 7% Enter on line 17 the combined the amount you paid for all the shares. (.07). Enter the result on line 13 as a adjustments for the four items listed Your adjustment is $1,500 ($2,500 positive amount. earlier. $1,000). Enter it on Form 6251, line 14. Example. On March 13, 2009, Line 14 Exercise of Line 16 Large Partnerships Victor Ash, whose filing status is single, Incentive Stock Options If you were a partner in an electing paid $20,000 to exercise an incentive For the regular tax, no income is large partnership, enter the amount stock option (which was granted to him recognized when an incentive stock from Schedule K-1 (Form 1065-B), box on January 3, 2008) to buy 200 shares option (ISO), as defined in section 6. Take into account any amount from of stock worth $200,000. The $180, (b), is exercised. However, this rule box 5 on Form 6251, line 19. difference between his cost and the does not apply for the AMT. Instead, value of the stock at the time he you generally must include on line 14 Line 17 Disposition of exercised the option is not taxable for the excess, if any, of: Property the regular tax. His regular tax basis in 1. The fair market value of the stock the stock at the end of 2009 is $20,000. Your AMT gain or loss from the acquired through exercise of the option For the AMT, however, Ash must disposition of property may be different (determined without regard to any lapse include the $180,000 as an adjustment from your gain or loss for the regular restriction) when your rights in the on his 2009 Form His AMT basis tax. This is because the property may acquired stock first become in the stock at the end of 2009 is have a different adjusted basis for the $200,000. transferable or when these rights are AMT. Use this line to report any AMT no longer subject to a substantial risk of adjustment resulting from refiguring: On January 18, 2010, Ash sold 100 forfeiture, over of the shares for $75,000. Because Ash 2. The amount you paid for the 1. Gain or loss from the sale, did not hold these shares more than 1 stock, including any amount you paid exchange, or involuntary conversion of year, that sale is a disqualifying for the ISO used to acquire the stock. property reported on Form 4797, Sales disposition. For the regular tax, Ash has of Business Property; ordinary income of $65,000 ($75,000 Even if your rights in the stock are 2. Casualty gain or loss to business minus his $10,000 basis in the 100 not transferable and are subject to a or income-producing property reported shares). Ash has no capital gain or loss substantial risk of forfeiture, you may on Form 4684, Casualties and Thefts; for the regular tax resulting from the elect to include in AMT income the 3. Ordinary income from the sale. For the AMT, Ash has no ordinary excess of the stock s fair market value disposition of property not already income, but has a short-term capital (determined without regard to any lapse taken into account in (1) or (2) or on loss of $25,000 ($75,000 minus his restriction) over the exercise price upon any other line on Form 6251, such as a $100,000 AMT basis in the 100 the transfer to you of the stock acquired disqualifying disposition of stock shares). through exercise of the option. You acquired in a prior year by exercising an incentive stock option; and On April 21, 2010, Ash sold the other must make the election by the 30th day 4. Capital gain or loss (including any 100 shares for $60,000. Because he after the date of the transfer. See Pub. carryover that is different for the AMT) held the shares for more than 1 year 525, Taxable and Nontaxable Income, reported on Schedule D (Form 1040), and more than 2 years had passed for more details. Capital Gains and Losses. since the option was granted to him, If you acquired stock by exercising the sale is not a disqualifying an ISO and you disposed of that stock First figure any ordinary income disposition. For the regular tax, Ash has in the same year, the tax treatment adjustment related to (3) above. Then, a long-term capital gain of $50,000 under the regular tax and the AMT is refigure Form 4684, Form 4797, and ($60,000 minus his regular tax basis of the same, and no adjustment is Schedule D for the AMT, if applicable, $10,000). For the AMT, Ash has a required. by taking into account any adjustments long-term capital loss of $40,000 Increase your AMT basis in any you made this year or in previous years ($60,000 minus his AMT basis of stock acquired through the exercise of that affect your basis or otherwise result $100,000). an ISO by the amount of the in a different amount for the AMT. Ash has no other sales of stock or adjustment. Keep adequate records for If you have a capital loss after other capital assets for Ash both the AMT and regular tax so that refiguring Schedule D for the AMT, enters a total negative adjustment of you can figure your adjustment. See apply the $3,000 capital loss limitation $118,000 on line 17 of his 2010 Form the instructions for line 17. separately to the AMT loss. Because 6251, figured as follows: -4- Instructions for Form 6251 (2010)

5 Ash figures a negative adjustment of Tangible property placed in service commercial revitalization deduction $65,000 for the difference between the after 1986 and before (If the under section 1400I. $65,000 of regular tax ordinary income transitional election was made under A natural gas gathering line placed in and the $0 of AMT ordinary income for section 203(a)(1)(B) of the Tax Reform service after April 11, the first sale. Act of 1986, this rule applies to property For the regular tax, Ash has $50,000 placed in service after July 31, 1986.) How Is Depreciation Refigured capital gain net income reported on for the AMT? Schedule D for the second sale. For the What Depreciation Is Not Property placed in service before AMT, Ash has a $25,000 short-term Refigured for the AMT? Refigure depreciation for the capital loss from the first sale, and a Do not refigure depreciation for the AMT using ADS, with the same $40,000 long-term capital loss from the AMT for the following. convention used for the regular tax. second sale, resulting in a net capital Residential rental property placed in See the following table for the method loss of $65,000 for the AMT. However, service after and recovery period to use. only $3,000 of the $65,000 net capital loss is allowed for 2010 for the AMT. Nonresidential real property with a Property Placed in Service Before 1999 The difference between the regular tax class life of 27.5 years or more placed Schedule D gain of $50,000 and the in service after 1998 that is depreciated IF the property is... THEN use the... $3,000 loss allowed for the AMT results for the regular tax using the straight line method. section 1250 straight line method in a $53,000 negative adjustment to property over 40 years. include on line 17. Other section 1250 property placed in service after 1998 that is depreciated tangible property straight line method Ash has an AMT capital loss for the regular tax using the straight line (other than section over the property s carryover from 2010 to 2011 of method property) AMT class life. $62,000, of which $22,000 is short-term Property (other than section 1250 depreciated using and $40,000 is long-term. If he has no property) placed in service after 1998 straight line method other Schedule D transactions for 2011, that is depreciated for the regular tax for the regular tax his adjustment reported on his 2011 using the 150% declining balance any other tangible 150% declining Form 6251 would be limited to ($3,000), method or the straight line method. property balance method, the amount of his capital loss limitation Property for which you elected to use switching to straight for Line 18 Post-1986 Depreciation This section describes when depreciation must be refigured for the AMT and how to figure the amount to enter on line 18. Do not use line 18 for depreciation related to the following. Employee business expenses claimed on line 21 of Schedule A (Form 1040) or line 9 of Schedule A (Form 1040NR). Take this adjustment into account on line 5. Passive activities. Take this adjustment into account on line 19. An activity for which you are not at risk or income or loss from a partnership or an S corporation if the basis limitations apply. Take this adjustment into account on line 20. A tax shelter farm activity. Take this adjustment into account on line 27. What Depreciation Must Be Refigured for the AMT? Generally, you must refigure depreciation for the AMT, including depreciation allocable to inventory costs, for: Property placed in service after 1998 that is depreciated for the regular tax using the 200% declining balance method (generally 3-, 5-, 7-, and 10-year property under the modified accelerated cost recovery system (MACRS), except for qualified property eligible for the special depreciation allowance (discussed later on this page)); Section 1250 property placed in service after 1998 that is not depreciated for the regular tax using the straight line method; and Instructions for Form 6251 (2010) the alternative depreciation system line method the first (ADS) of section 168(g) for the regular tax year it gives a tax. larger deduction, Qualified property that is or was over the property s eligible for a special depreciation AMT class life. allowance if the depreciable basis of the property for the AMT is the same as Property placed in service after for the regular tax. This applies to any Use the same convention and recovery special depreciation allowance, period used for the regular tax. For including those for qualified disaster property other than section 1250 assistance property, qualified reuse and property, use the 150% declining recycling property, qualified cellulosic balance method, switching to straight biofuel plant property, qualified New line the first tax year it gives a larger York Liberty Zone property, qualified deduction. For section 1250 property, Gulf Opportunity Zone property, and use the straight line method. Kansas disaster area qualified recovery How Is the AMT Class Life assistance property. The special allowance is deductible for the AMT, Determined? and there also is no adjustment The class life used for the AMT is not required for any depreciation figured on necessarily the same as the recovery the remaining basis of the qualified period used for the regular tax. The property if the depreciable basis of the class lives for the AMT are listed in property for the AMT is the same as for Rev. Proc , C.B. 674, and the regular tax. Property for which an in Pub. 946, How To Depreciate election is in effect to not have the Property. Use 12 years for any tangible special allowance apply is not qualified personal property not assigned a class property. life. Any part of the cost of any property See Pub. 946 for tables that can for which you elected to take a section TIP be used to figure AMT 179 expense deduction. The reduction depreciation. Rev. Proc , to the depreciable basis of section C.B. 816, has special rules for property by the amount of the section short years and for property disposed 179 expense deduction is the same for of before the end of the recovery the regular tax and the AMT. period. Motion picture films, videotapes, or sound recordings. How Is the Adjustment Property depreciated under the Figured? unit-of-production method or any other Subtract the AMT deduction for method not expressed in a term of depreciation from the regular tax years. deduction and enter the result. If the Indian reservation property that AMT deduction is more than the regular meets the requirements of section tax deduction, enter the difference as a 168(j). negative amount. Qualified revitalization expenditures In addition to the AMT adjustment to for which you elected to claim the your deduction for depreciation, you -5-

6 must also adjust the amount of Tax Shelter Passive Farm AMT. Enter the difference between the depreciation that was capitalized, if any, Activities regular tax and AMT deduction. If the to account for the difference between Refigure any gain or loss from a tax AMT deduction is greater, enter the the rules for the regular tax and the shelter passive farm activity taking into difference as a negative amount. AMT. Include on this line the current account all AMT adjustments and year adjustment to taxable income, if preferences and any AMT prior year If you had a loss on property for any, resulting from the difference. unallowed losses. If the amount is a which circulation costs have not been gain, include it on the AMT Form fully amortized for the AMT, your AMT Line 19 Passive Activities If the amount is a loss, do not include it deduction is the smaller of (a) the Your passive activity gains and losses on the AMT Form Carry the loss amount of the loss allowable for the must be refigured for the AMT by taking forward to 2011 to see if you have a costs had they remained capitalized or into account all adjustments and gain or loss from tax shelter passive (b) the remaining costs to be amortized preferences and any AMT prior year farm activities for for the AMT. unallowed losses that apply to that activity. You may fill out a second Form Insolvency Line 22 Long-Term 8582, Passive Activity Loss Limitations, If at the end of the tax year your liabilities exceed the fair market value Contracts and the other forms or schedules on which your passive activities are of your assets, increase your passive For the AMT, you generally must use reported, to determine your passive activity loss allowed by that excess (but the percentage-of-completion method activity loss allowed for the AMT, but do not by more than your total loss). See described in section 460(b) to not file the second set of forms and section 58(c)(1). determine your income from any schedules with your tax return. long-term contract (defined in section Line 20 Loss Limitations 460(f)). However, this rule does not Example. You are a partner in a For passive activities, see the line 19 apply to any home construction contract partnership and the Schedule K-1 instructions instead. For tax shelter (as defined in section 460(e)(6)). For (Form 1065) you received shows the farm activities (that are not passive), contracts excepted from the following. see the line 27 instructions that begin percentage-of-completion method for A passive activity loss of $4,125, on page 7. the regular tax by section 460(e)(1), A depreciation adjustment of $500 on Refigure your gains and losses from you must use the simplified procedures post-1986 property, and activities for which you are not at risk for allocating costs outlined in section An adjustment of $225 on the and basis limitations applicable to 460(b)(3) to determine the percentage disposition of property. partnerships and S corporations by of completion. Because the two adjustments above taking into account all AMT adjustments are from the passive activity and are and preferences that apply. See Enter the difference between the not allowed for the AMT, you must first sections 59(h), 465, 704(d), and AMT and regular tax income. If the reduce the passive activity loss by 1366(d). AMT income is smaller, enter the those amounts. The result is a passive Enter the difference between the difference as a negative amount. activity loss for the AMT of $3,400. You amount that would be reported for the then enter this amount on the AMT activity on Schedule C, C-EZ, E, or F or Note. If you are required to use the Form 8582 and refigure the allowable Form 4835 for the AMT and the regular percentage-of-completion method for passive activity loss for the AMT. tax amount. If (a) the AMT loss is more either the regular tax or the AMT, you than the regular tax loss, (b) the AMT may owe or be entitled to a refund of The amount of any AMT passive gain is less than the regular tax gain, or interest for the tax year the contract is TIP activity loss that is not (c) you have an AMT loss and a regular completed or adjusted. For details, see deductible and is carried tax gain, enter the adjustment as a Form 8697, Interest Computation Under forward is likely to differ from the negative amount. the Look-Back Method for Completed regular tax amount, if any. Therefore, The AMT amount of any gain or loss Long-Term Contracts. keep adequate records for both the from activities for which you are not at AMT and regular tax. risk is likely to differ from the regular tax Line 23 Mining Costs Enter the difference between the amount. Your AMT basis in amount that would be reported for the partnerships and S corporations is also Do not make this adjustment for activity on Schedule C, C-EZ, E, or F or likely to differ from your regular tax! costs for which you elected the Form 4835, Farm Rental Income and basis. Therefore, keep adequate optional 10-year write-off for the Expenses, for the AMT and the regular records for both the AMT and regular regular tax. tax amount. If (a) the AMT loss is more tax. than the regular tax loss, (b) the AMT Enter any adjustment for amounts Mining exploration and development gain is less than the regular tax gain, or reported on Schedule D, Form 4684, or costs deducted in full for the regular tax (c) you have an AMT loss and a regular Form 4797 for the activity on line 17 in the tax year they were paid or tax gain, enter the adjustment as a instead of line 20. incurred must be capitalized and negative amount. amortized over 10 years for the AMT. Line 21 Circulation Costs Enter the difference between the Enter any adjustment for amounts regular tax and AMT deduction. If the reported on Schedule D, Form 4684, or Do not make this adjustment for AMT deduction is greater, enter the Form 4797 for the activity on line 17! costs for which you elected the difference as a negative amount. instead of line 19. See the instructions optional 3-year write-off for the for line 17 that begin on page 4. regular tax. If you had a loss on property for Circulation costs (expenditures to which mining costs have not been fully Publicly Traded Partnership establish, maintain, or increase the amortized for the AMT, your AMT (PTP) circulation of a newspaper, magazine, deduction is the smaller of (a) the loss If you had a loss from a PTP, refigure or other periodical) deducted in full for allowable for the costs had they the loss using any AMT adjustments the regular tax in the year they were remained capitalized or (b) the and preferences and any AMT prior paid or incurred must be capitalized remaining costs to be amortized for the year unallowed loss. and amortized over 3 years for the AMT. -6- Instructions for Form 6251 (2010)

7 Line 24 Research and received or accrued during the tax year from all oil, gas, and geothermal wells Experimental Costs by the deductions allocable to those AMT patronage dividend adjustment income. Unless the distributions are nontaxable, include on line 27 the total wells (reduced by the excess IDCs). reported to you by the cooperative, Do not make this adjustment for When refiguring net income, use only such as on Form 1099-PATR.! costs paid or incurred in income and deductions allowed for the connection with an activity in AMT. Pollution Control Facilities which you materially participated under the passive activity rules or for costs for Exception. The preference for IDCs The section 169 election to amortize which you elected the optional 10-year from oil and gas wells does not apply to the basis of a certified pollution control write-off for the regular tax. taxpayers who are independent facility over a 60-month or 84-month producers (that is, not integrated oil period is not available for the AMT. For Research and experimental costs companies as defined in section facilities placed in service before 1999, deducted in full for the regular tax in the 291(b)(4)). However, this benefit may figure the AMT deduction using ADS. tax year they were paid or incurred be limited. First, figure the IDC For facilities placed in service after must be capitalized and amortized over preference as if this exception did not 1998, figure the AMT deduction under 10 years for the AMT. Enter the apply. Then, for purposes of this MACRS using the straight line method. difference between the regular tax and exception, complete Form 6251 through Enter the difference between the AMT deduction. If the AMT deduction is line 27, including the IDC preference regular tax and AMT deduction. If the greater, enter the difference as a and treating line 11 as if it were zero, AMT amount is greater, enter the negative amount. and combine lines 1 through 27. If the difference as a negative amount. If you had a loss on property for amount of the IDC preference exceeds which research and experimental costs 40% of the total of lines 1 through 27 Tax Shelter Farm Activities have not been fully amortized for the (figured as described in the preceding Figure this adjustment only if you have AMT, your AMT deduction is the sentence), enter the excess on line 26 a gain or loss from a tax shelter farm smaller of (a) the loss allowable for the (your benefit from this exception is activity (as defined in section 58(a)(2)) costs had they remained capitalized or limited). Otherwise, do not enter an that is not a passive activity. If the (b) the remaining costs to be amortized amount on line 26 (your benefit from activity is passive, you must include it for the AMT. this exception is not limited). with your other passive activities on line 19. Line 25 Installment Sales Line 27 Other Adjustments The installment method does not apply Enter on line 27 the total of any other Refigure all gains and losses you for the AMT to any nondealer adjustments that apply to you, including reported for the regular tax from tax disposition of property after August 16, the following. shelter farm activities by taking into 1986, but before January 1, 1987, if an account any AMT adjustments and installment obligation to which the Depreciation Figured Using preferences. Determine your tax shelter proportionate disallowance rule applied Pre-1987 Rules farm activity gain or loss for the AMT arose from the disposition. Enter the using the same rules you used for the amount of installment sale income This preference generally only applies regular tax with the following reported for the regular tax as a to property placed in service after 1987, modifications. No refigured loss is negative amount on line 25. but depreciated using pre-1987 rules allowed, except to the extent you are due to transitional provisions of the Tax insolvent (see section 58(c)(1)). A Line 26 Intangible Drilling Reform Act of refigured loss may not be used in the Costs (IDCs) For the AMT, you must use the current tax year to offset gains from straight line method to figure other tax shelter farm activities. Instead, Do not make this adjustment for depreciation on real property for which any refigured loss must be suspended! costs for which you elected the accelerated depreciation was and carried forward indefinitely until (a) optional 60-month write-off for determined using pre-1987 rules. Use a you have a gain in a subsequent tax the regular tax. recovery period of 19 years for 19-year year from that same activity or (b) you IDCs from oil, gas, and geothermal real property and 15 years for dispose of the activity. wells are a preference to the extent that low-income housing. For leased the excess IDCs exceed 65% of the net Enter the difference between the personal property other than recovery income from the wells. Figure the amount that would be reported for the property, enter the amount by which preference for all oil and gas properties activity on Schedule E or F or Form your regular tax depreciation using the separately from the preference for all 4835 for the AMT and the regular tax pre-1987 rules exceeds the geothermal properties. amount. If (a) the AMT loss is more depreciation allowable using the than the regular tax loss, (b) the AMT Excess IDCs. Figure excess IDCs as straight line method. For leased 10-year gain is less than the regular tax gain, or follows. recovery property and leased 15-year (c) you have an AMT loss and a regular Step 1. Determine the amount of public utility property, enter the amount tax gain, enter the adjustment as a your IDCs allowed for the regular tax by which your regular tax depreciation negative amount. under section 263(c), but do not include exceeds the depreciation allowable any section 263(c) deduction for using the straight line method with a Enter any adjustment for amounts nonproductive wells. half-year convention, no salvage value, reported on Schedule D, Form 4684, or Step 2. Subtract the amount that and a recovery period of 15 years (22 Form 4797 for the activity on line 17 would have been allowed had you years for 15-year public utility property). instead of line 27. amortized these IDCs over a Figure the excess of the regular tax 120-month period starting with the depreciation over the AMT depreciation Charitable Contributions of month the well was placed in separately for each property and Certain Property production. If you prefer not to use the include on line 27 only positive If you made a charitable contribution of 120-month period, you can elect to use amounts. property to which section 170(e) applies any method that is permissible in and you had a different basis for AMT determining cost depletion. Patron s Adjustment purposes, you may have to make an Net income. Determine net income by Distributions you received from a adjustment. See section 170(e) for reducing the gross income that you cooperative may be includible in details. Instructions for Form 6251 (2010) -7-

8 Alcohol and Cellulosic Biofuel Self-employed SEP, SIMPLE, and You have a section 179 deduction Fuels Credit and Biodiesel and qualified plans deduction (Form 1040, carryforward of $300 for the AMT. Renewable Diesel Fuels Credit line 28, or Form 1040NR, line 28). IRA deduction (Form 1040, line 32, You include a $700 negative If your taxable income includes an or Form 1040NR, line 32), affected by adjustment on line 27 because your amount from the alcohol and cellulosic the earned income limitation of section section 179 deduction for the AMT is biofuel fuels credit or the biodiesel and 219(b)(1)(B). $700 greater than your allowable renewable diesel fuels credit under regular tax deduction. In the following section 87, include that amount as a Figure the difference between the year, when you use the $1,000 regular negative amount on line 27. AMT and regular tax amount for each tax carryforward, you will have a $700 item. Combine the amounts for all your positive related adjustment for the AMT related adjustments and include the Related Adjustments because your AMT carryforward is only total on line 27. Keep a copy of all $300. If you have an entry on line 8 because computations for your records, you deducted investment interest including any AMT carryover and basis Line 28 Alternative allocable to an interest in a trade or amounts. Minimum Taxable Income business, or on line 9, 13, 14, or 16 through 26, or you have any amount Do not include on line 27 any If your filing status is married filing included on line 27 from pre-1987! adjustment for an item you separately and line 28 is more than depreciation, patron s adjustment, refigured on another line of this $219,900 you must include an pollution control facilities, or tax shelter form (for example, line 9). additional amount on line 28. If line 28 farm activities, you may have to refigure is $364,800 or more, include an Example. On your Schedule C any item of income or deduction based additional $36,225. Otherwise, include (Form 1040) you have a net profit of 25% of the excess of the amount on on a limit of income other than AGI or $9,000 before figuring your section 179 line 28 over $219,900. For example, if modified AGI. deduction. You do not report any other the amount on line 28 is $239,900, business income on your return. During Affected items include the following. enter $244,900 instead the additional the year, you purchased an asset for $5,000 is 25% of $20,000 ($239,900 Section 179 expense deduction $10,000 for which you elect to take the minus $219,900). (Form 4562, line 12). section 179 deduction. You also have Expenses for business or rental use an AMT depreciation adjustment of Special Rule for Holders of a of your home. $700 for other assets depreciated on Residual Interest in a REMIC Conservation expenses (Schedule F, your Schedule C. If you held a residual interest in a real line 14). Your section 179 deduction for the estate mortgage investment conduit Taxable IRA distributions (Form regular tax is limited to your net profit (REMIC) in 2010, the amount you enter 1040, line 15b, or Form 1040NR, line (before any section 179 deduction) of on line 28 may not be less than the 16b), if prior year IRA deductions were $9,000. The $1,000 excess is a section amount on Schedule E, line 38, column different for the AMT and the regular 179 deduction carryforward for the (c). If the amount in column (c) is larger tax. regular tax. than the amount you would otherwise Self-employed health insurance For the AMT, your net profit is enter on line 28, enter the amount from deduction (Form 1040, line 29, or Form $9,700, and you are allowed a section column (c) instead and enter Sch. Q 1040NR, line 29). 179 deduction of $9,700 for the AMT. on the dotted line next to line 28. If your filing status is married filing separately, be sure to include the additional amount that must be added Exemption Worksheet to line 28 (as explained above) before Line 29 Keep for Your Records you compare line 28 with the amount on Schedule E, line 38, column (c). Note. If Form 6251, line 28, is equal to or more than: $302,300 if single or head of household, $439,800 if married filing jointly or qualifying widow(er), or $219,900 if married filing separately, your exemption is zero. Do not complete this worksheet; instead, enter the amount from Form 6251, line 28, on line 30 and go to line 31. Part II Alternative Minimum Tax 1. Enter: $47,450 if single or head of household; $72,450 if married filing jointly or qualifying widow(er); $36,225 if married filing separately If line 28 is more than the amount 2. Enter your alternative minimum taxable income shown for your filing status in the (AMTI) from Form 6251, line middle column of the chart on line 29, 3. Enter: $112,500 if single or head of household; see the worksheet on this page to $150,000 if married filing jointly or qualifying figure the amount to enter on line 29. widow(er); $75,000 if married filing separately 3. Line 29 Exemption Amount 4. Subtract line 3 from line 2. If zero or less, enter Certain Children Under Age Your exemption amount is limited to the 5. Multiply line 4 by 25% (.25) amount of your earned income plus 6. Subtract line 5 from line 1. If zero or less, enter -0-. If any of the $6,700 if condition 1, 2, or 3 below three conditions under Certain Children Under Age 24 apply to applies to you. you, complete lines 7 through 10. Otherwise, stop here and 1. You were under age 18 at the enter this amount on Form 6251, line 29, and go to Form 6251, end of line You were age 18 at the end of 7. Minimum exemption amount for certain children under age $6, and did not have earned income 8. Enter your earned income, if any (see instructions) that was more than half of your support. 9. Add lines 7 and You were a full-time student over 10. Enter the smaller of line 6 or line 9 here and on Form 6251, line age 18 and under age 24 at the end of 29, and go to Form 6251, line and did not have earned income that was more than half of your support. -8- Instructions for Form 6251 (2010)