Instructions For Form 6251 - Alternative Minimum Tax - Individuals

2006

Department of the Treasury

Internal Revenue Service

Instructions for Form 6251

Alternative Minimum Tax—Individuals

Optional Write-Off for

Therefore, you need to refigure items for

Section references are to the Internal

the AMT that you figured for the regular

Revenue Code unless otherwise noted.

Certain Expenditures

tax. In some cases, you may wish to do

General Instructions

this by completing the applicable tax form

There is no AMT adjustment for the

a second time. If you do complete another

following items if you elect for the regular

form, do not attach it to your tax return,

What’s New

tax to deduct them ratably over the period

but keep it for your records. However, you

of time shown.

•

For 2006, the exemption amount has

•

must attach an AMT Form 1116, Foreign

Circulation expenditures — 3 years

increased to $42,500 ($62,550 if married

Tax Credit, to your return; see the

(section 173).

filing jointly or qualifying widow(er);

•

instructions for line 32 beginning on

Research and experimental

$31,275 if married filing separately).

page 8.

expenditures — 10 years (section 174(a)).

•

The exemption amount is now limited

•

Mining exploration and development

for a child under age 18. (Before 2006,

For the regular tax, some deductions

costs — 10 years (sections 616(a) and

the limit applied to a child under age 14.)

and credits may result in carrybacks or

617(a)).

The minimum exemption amount for a

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carryforwards to other tax years.

Intangible drilling costs — 60 months

child has increased to $6,050. See the

Examples are investment interest

(section 263(c)).

instructions for line 29 beginning on

expense, a net operating loss, a capital

For information on making the election,

page 7.

loss, a passive activity loss, and the

•

see section 59(e) and Regulations section

If you claim the foreign earned income

foreign tax credit. Because you may have

1.59-1. Also see Pub. 535.

exclusion or the housing exclusion on

to refigure these items for the AMT, the

Form 2555 or 2555-EZ, you must use the

carryback or carryforward amount may be

Foreign Earned Income Tax Worksheet to

different for the AMT than for the regular

figure the amount to enter on line 31. See

Specific Instructions

tax. Your at-risk limits and basis amounts

the instructions for line 31 on page 8.

also may differ for the AMT. Therefore,

you must keep records of these different

If you owe AMT, you may be able

Purpose of Form

amounts.

TIP

to lower your total tax (regular tax

Use Form 6251 to figure the amount, if

plus AMT) by claiming itemized

any, of your alternative minimum tax

deductions on Form 1040, even if your

Partners and Shareholders

(AMT). The AMT applies to taxpayers

total itemized deductions are less than

who have certain types of income that

If you are a partner in a partnership or a

the standard deduction. This is because

receive favorable treatment, or who

shareholder in an S corporation, see

the standard deduction is not allowed for

qualify for certain deductions, under the

Schedule K-1 and its instructions to figure

the AMT and, if you claim the standard

tax law. These tax benefits can

your adjustments or preferences from the

deduction on Form 1040, you cannot

significantly reduce the regular tax of

partnership or S corporation to include on

claim itemized deductions for the AMT.

some taxpayers with higher economic

Form 6251.

incomes. The AMT sets a limit on the

Part I—Alternative

amount these benefits can be used to

Nonresident Aliens

Minimum Taxable Income

reduce total tax.

If you are a nonresident alien and you

(AMTI)

Also use Form 6251 to figure the tax

disposed of U.S. real property interests at

liability limit on the credits listed under

a gain, you must make a special

Who Must File below.

To avoid duplication, any

computation. Fill in Form 6251 through

adjustment or preference for line

line 30. If your net gain from the

Who Must File

5, 18, or 19 or for a tax shelter

CAUTION

disposition of U.S. real property interests

farm activity on line 26 must not be taken

and the amount on line 28 are both

Attach Form 6251 to your return if any of

into account in figuring the amount to

greater than the tentative amount you

the following statements is true.

enter for any other adjustment or

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figured for line 30, replace the amount on

Form 6251, line 31, is greater than line

preference.

line 30 with the smaller of that net gain or

34.

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the amount on line 28. Also, enter “RPI”

You claim any general business credit,

Line 1

on the dotted line next to line 30.

the qualified electric vehicle credit, the

If Form 1040, line 43, includes a write-in

Otherwise, do not change line 30.

alternative motor vehicle credit, the

amount (such as a capital construction

alternative fuel vehicle refueling property

fund deduction for commercial

credit, or the credit for prior year minimum

Credit for Prior Year

fishermen), adjust line 1 by the write-in

tax.

amount.

•

Minimum Tax

The total of Form 6251, lines 8 through

Form 1040NR. If you are filing Form

27, is negative and line 31 would be

See Form 8801, Credit for Prior Year

1040NR, enter the amount from Form

greater than line 34 if you did not take into

Minimum Tax — Individuals, Estates, and

1040NR, line 38 (minus any amount on

account lines 8 through 27.

Trusts, if you paid AMT for 2005 or you

Form 8914, line 6). If less than zero, enter

had a minimum tax credit carryforward on

as a negative amount.

Recordkeeping

your 2005 Form 8801. If you pay AMT for

Line 3—Taxes

2006, you may be able to take a credit on

For the AMT, certain items of income,

Form 8801 for 2007.

deductions, etc., receive different tax

Enter the amount of all taxes from

treatment than for the regular tax.

Schedule A (Form 1040), line 9, except

Cat. No. 64277P

Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2006

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