Instructions For Form 6251 - Alternative Minimum Tax-Individuals

deduction is the same for the regular

See Pub. 946 for optional

$90,000 difference is an adjustment

TIP

tax and the AMT.

tables that may be used to

that must be included on line 10 of

•

Motion picture films, videotapes, or

figure AMT depreciation. Rev.

his 2000 Form 6251. His AMT basis

sound recordings.

Proc. 89-15, 1989-1 C.B. 816, has

in the stock at the end of 2000 is

•

Property depreciated under the

special rules for short years and for

$100,000.

unit-of-production method or any

property disposed of before the end

In February 2001, the stock’s value

other method not expressed in a term

of the recovery period.

had dropped, and Victor sold it for

of years.

•

$60,000. For the regular tax, he has a

Qualified Indian reservation

How Is the Adjustment To Enter

capital gain of $50,000 ($60,000

property.

on Line 8 Figured?

sales price minus his regular tax

How Is Depreciation Refigured

basis of $10,000). For the AMT,

Subtract the AMT deduction for

for the AMT?

Victor has a capital loss of $40,000

depreciation from the regular tax

($60,000 sales price minus his AMT

deduction and enter the result. If the

Property placed in service before

basis of $100,000). The AMT capital

AMT deduction is more than the

1999. Refigure depreciation for the

loss allowed for the year, however, is

regular tax deduction, enter the

AMT using ADS, with the same

limited to $3,000. Victor has no other

difference as a negative amount.

convention used for the regular tax.

capital transactions for 2001. He

See the table below for the method

In addition to the AMT adjustment

includes on line 9 an adjusted loss of

and recovery period to use.

to your deduction for depreciation,

($53,000), which is the difference

you must also adjust the amount of

between the ($3,000) capital loss he

depreciation that was capitalized, if

Property Placed in Service Before

is allowed for the AMT and the

1999

any, to account for the difference

$50,000 capital gain net income

between the rules for the regular tax

IF the property

THEN use the...

reported on Schedule D for the

and the AMT. Include on this line the

is...

regular tax.

current year adjustment to taxable

Section 1250

Straight line

income, if any, resulting from the

Victor has an AMT long-term

property.

method over 40

difference.

capital loss carryover from 2001 to

years.

2002 of $37,000. If Victor has no

Line 9—Adjusted Gain or

other Schedule D transactions for

Tangible property

Straight line

Loss

2002, his adjusted loss reported on

(other than section method over the

Use this line to report any AMT

line 9 of Form 6251 will be ($3,000).

1250 property)

property’s AMT

adjustment resulting from refiguring:

Victor will then have an AMT

depreciated using class life.

•

Gain or loss from the sale,

straight line for the

long-term capital loss carryover from

exchange, or involuntary conversion

regular tax.

2002 to 2003 of $34,000.

of property reported on Form 4797,

Any other tangible 150% declining

Sales of Business Property;

Line 10—Incentive Stock

•

property.

balance method,

Casualty gain or loss to business

Options

switching to

or income-producing property

straight line the

For the regular tax, no income is

reported on Form 4684, Casualties

first tax year it

recognized when an incentive stock

and Thefts; or

gives a larger

•

option (ISO), as defined in section

Capital gain or loss (including any

deduction, over the

422(b), is exercised. However, this

carryover that is different for the

property’s AMT

rule does not apply for the AMT.

AMT) reported on Schedule D (Form

class life.

Instead, you generally must include

1040), Capital Gains and Losses.

on line 10 the excess, if any, of:

•

The $3,000 capital loss

Property placed in service after

The fair market value of the stock

limitation for the regular tax

1998. Use the same convention and

acquired through exercise of the

applies separately to any

CAUTION

recovery period used for the regular

option (determined without regard to

capital loss as refigured for the AMT.

tax. For property other than section

any lapse restriction) when your

See the example below.

1250 property, use the 150%

rights in the acquired stock first

declining balance method, switching

become transferable or when these

to straight line the first tax year it

Refigure the gain or loss reported

rights are no longer subject to a

gives a larger deduction. For section

on your return from the above forms

substantial risk of forfeiture over

•

by taking into account any AMT

1250 property, use the straight line

The amount you paid for the stock,

adjustments you made this year or in

method.

including any amount you paid for the

previous years that affect your

ISO used to acquire the stock.

Note: If you did not make this

adjusted basis. Enter on line 9 the

adjustment in 1999 or 2000 for

Note: Even if your rights in the stock

difference between the gain or loss, if

section 1250 property placed in

are not transferable and are subject

any, reported for the regular tax and

service after 1998 that was not

to a substantial risk of forfeiture, you

that figured for the AMT. If (a) the

depreciated for the regular tax using

may elect to include in AMT income

AMT gain is less than the regular tax

the straight line method, you must file

the excess of the stock’s fair market

gain, (b) the AMT loss is more than

an amended return if you are required

value (determined without regard to

the regular tax loss, or (c) you have

to file Form 6251 for that year (after

any lapse restriction) over the

an AMT loss and a regular tax gain

taking this adjustment into account).

exercise price upon the transfer to

(or no gain or loss for the regular tax),

How Is the AMT Class Life

you of the stock acquired through

enter the difference as a negative

exercise of the option. You must

Determined?

amount.

make the election by the 30th day

The class life used for the AMT is not

Example. In January 2000, Victor

after the date of the transfer. See

necessarily the same as the recovery

Ash exercised an incentive stock

Pub. 525 for more details.

period used for the regular tax. The

option. He paid $10,000 for stock

class lives for the AMT are listed in

worth $100,000. The $90,000

If you acquired stock by exercising

Rev. Proc. 87-56, 1987-2 C.B. 674,

difference between his cost and the

an ISO and you disposed of that

and in Pub. 946, How To Depreciate

value of the stock is not taxable for

stock in the same year, the tax

Property. Use 12 years for any

the regular tax. His regular tax basis

treatment under the regular tax and

tangible personal property not

in the stock at the end of the year is

the AMT is the same, and no

assigned a class life.

$10,000. For the AMT, however, the

adjustment is required.

-3-

Instructions For Form 6251 - Alternative Minimum Tax-Individuals - 2001 Page 3

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