Instructions For Form 6251 - Alternative Minimum Tax - Individuals

Line 8—Investment Interest

If you filled out Form 4952, Investment

Home Mortgage Interest Adjustment Worksheet —

Interest Expense Deduction, for your

Line 4

Keep for Your Records

regular tax, you will need to fill out a

second Form 4952 for the AMT as

follows.

1. Enter the total of the home mortgage interest you deducted on lines 10

Step 1. Follow the Form 4952

through 12 of Schedule A (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . 1.

instructions for line 1, but also include the

2. Enter the part, if any, of the interest included on line 1

following amounts when completing

above that was paid on an eligible mortgage (defined

line 1.

on this page) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

•

Any interest expense on Form 6251,

3. Enter the part, if any, of the interest included on line 1

line 4, that was paid or accrued on

above that was paid on a mortgage whose proceeds

indebtedness attributable to property held

were used in a refinancing (including a second or later

for investment within the meaning of

refinancing) of an eligible mortgage. Do not include any

section 163(d)(5) (for example, interest on

interest paid on the part of the balance of the new

a home equity loan whose proceeds were

mortgage that exceeded the balance of the original

invested in stocks or bonds).

eligible mortgage immediately before it was refinanced

•

Any interest that would have been

(or, if smaller, the balance of any prior refinanced

deductible if interest earned on private

mortgage immediately before that mortgage was

refinanced) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

activity bonds issued after August 7,

1986, had been includible in gross

4. Enter the part, if any, of the interest included on line 1

above that was paid on a mortgage:

income.

• Taken out before July 1, 1982, and

Step 2. Enter your AMT disallowed

• Secured, at the time the mortgage was taken out, by

investment interest expense from 2005 on

your main home or a qualified dwelling used by you or

line 2. Complete line 3.

your family (see definitions on this page).

Step 3. When completing Part II,

Do not include any amount entered on line 2 or line 3

refigure the following amounts, taking into

above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

account all adjustments and preferences.

5. Add lines 2 through 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

•

Gross income from property held for

6. Subtract line 5 from line 1 and enter the result on Form 6251, line 4 . . . . 6.

investment.

•

Net gain from the disposition of

property held for investment.

generation-skipping transfer taxes on

loan on their home and used the

•

Net capital gain from the disposition of

income distributions. Be sure to include

proceeds to buy a new car. They paid

property held for investment.

any state and local general sales taxes

$5,000 in interest on the home equity loan

•

Investment expenses.

included on Schedule A, line 9.

in 2006. They enter the following amounts

on the Home Mortgage Interest

Include any interest income and

Form 1040NR. If you are filing Form

Adjustment Worksheet: $24,000 on line 1

investment expenses from private activity

1040NR, enter the amount of all taxes

($10,000 plus $9,000 plus $5,000),

bonds issued after August 7, 1986.

from Schedule A (Form 1040NR), line 3,

$10,000 on line 2, $9,000 on line 3, $ -0-

except generation-skipping transfer taxes

On line 4g, enter the smaller of:

on line 4, $19,000 on line 5 ($10,000 plus

on income distributions.

1. The amount from line 4g of your

$9,000), and $5,000 on line 6 ($24,000

regular tax Form 4952, or

Line 4—Home Mortgage

minus $19,000).

2. The total of lines 4b and 4e of this

Interest Adjustment

Line 5—Miscellaneous

AMT Form 4952.

Complete the worksheet on this page to

Deductions

figure your home mortgage interest

Step 4. Complete Part III.

If you are filing Form 1040NR, enter the

adjustment. The definitions of certain

Enter on Form 6251, line 8, the

amount from Schedule A (Form 1040NR),

terms used in the worksheet are as

difference between line 8 of your AMT

line 15.

follows.

Form 4952 and line 8 of your regular tax

Line 6

Form 4952. If your AMT expense is

Eligible mortgage. An eligible mortgage

greater, enter the difference as a negative

is a mortgage whose proceeds were used

If you are filing Form 1040NR and line 36

amount.

to buy, build, or substantially improve

is over $150,500 (over $75,250 if you

your main home or a second home that is

checked filing status box 3, 4, or 5), enter

Investment interest expense that is not

a qualified dwelling. A mortgage whose

the amount from line 11 of the Itemized

an itemized deduction. If you did not

proceeds were used to refinance another

Deductions Worksheet in the instructions

itemize deductions and you had

mortgage is not an eligible mortgage.

for Form 1040NR.

investment interest expense, do not enter

an amount on Form 6251, line 8, unless

Qualified dwelling. A qualified dwelling

Line 7—Refund of Taxes

you reported investment interest expense

is any house, apartment, condominium, or

Include any refund from Form 1040, line

on Schedule E. If you did, follow the steps

mobile home not used on a transient

10 (or Form 1040NR, line 11), that is

above for completing Form 4952. Allocate

basis.

attributable to state or local income taxes.

the investment interest expense allowed

Family. Family includes only your

Also include any refunds received in 2006

on line 8 of the AMT Form 4952 in the

brothers and sisters (whether by whole or

and included in income on Form 1040,

same way you did for the regular tax.

half blood), your spouse, your ancestors,

line 21, that are attributable to state or

Enter on Form 6251, line 8, the difference

and your lineal descendants.

local personal property taxes or general

between the amount allowed on Schedule

Example. In 2006, Dave and Jennifer

sales taxes, foreign income taxes, or

E for the regular tax and the amount

paid $10,000 in interest on a mortgage

state, local, or foreign real property taxes.

allowed on Schedule E for the AMT.

they took out to buy their home (an

If you include an amount from Form 1040,

Line 9—Depletion

eligible mortgage). In May 2006, they

line 21, you must enter a description and

refinanced that mortgage and paid $9,000

the amount next to the entry space for

You must refigure your depletion

in interest through the rest of the year.

line 7. For example, if you include a

deduction for the AMT. To do so, use only

The balance of the new mortgage is the

refund of real property taxes, enter “real

income and deductions allowed for the

same as the balance of the old mortgage.

property” and the amount next to the

AMT when refiguring the limit based on

In July 2006, they obtained a home equity

entry space.

taxable income from the property under

-2-

Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2006 Page 2

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