Instructions For Form 6251 - Alternative Minimum Tax - Individuals

the difference between the rules for the

AMT Form 8582. Carry the loss forward

described in section 460(b) to determine

regular tax and the AMT. Include on this

to 2007 to see if you have a gain or loss

your income from any long-term contract

line the current year adjustment to taxable

from tax shelter passive farm activities for

(defined in section 460(f)). However, this

income, if any, resulting from the

2007.

rule does not apply to any home

difference.

construction contract (as defined in

Insolvency

section 460(e)(6)). For contracts excepted

Line 18—Passive Activities

If at the end of the tax year your liabilities

from the percentage-of-completion

exceed the fair market value of your

Your passive activity gains and losses

method for the regular tax by section

assets, increase your passive activity loss

must be refigured for the AMT by taking

460(e)(1), you must use the simplified

allowed by that excess (but not by more

into account all adjustments and

procedures for allocating costs outlined in

than your total loss). See section 58(c)(1).

preferences and any AMT prior year

section 460(b)(3) to determine the

unallowed losses that apply to that

percentage of completion.

Line 19—Loss Limitations

activity. You may fill out a second Form

Enter the difference between the AMT

For passive activities, see the line 18

8582, Passive Activity Loss Limitations,

and regular tax income. If the AMT

instructions instead. For tax shelter farm

and the other forms or schedules on

income is smaller, enter the difference as

activities (that are not passive), see the

which your passive activities are reported,

a negative amount.

line 26 instructions on page 6.

to determine your passive activity loss

allowed for the AMT, but do not file the

Refigure your gains and losses from

Note. If you are required to use the

second set of forms and schedules with

activities for which you are not at risk and

percentage-of-completion method for

your tax return.

either the regular tax or the AMT, you

basis limitations applicable to

may owe or be entitled to a refund of

partnerships and S corporations by taking

Example. You are a partner in a

interest for the tax year the contract is

into account all AMT adjustments and

partnership and the Schedule K-1 (Form

completed or adjusted. For details, see

preferences that apply. See sections

1065) you received shows the following.

•

Form 8697, Interest Computation Under

59(h), 465, 704(d), and 1366(d).

A passive activity loss of $4,125,

•

the Look-Back Method for Completed

A depreciation adjustment of $500 on

Enter the difference between the

Long-Term Contracts.

post-1986 property, and

amount that would be reported for the

•

An adjustment of $225 on the

activity on Schedule C, C-EZ, E, or F or

Line 22—Mining Costs

disposition of property.

Form 4835 for the AMT and the regular

Note. Do not make this adjustment for

tax amount. If (a) the AMT loss is more

Because the two adjustments above

costs for which you elected the optional

than the regular tax loss, (b) the AMT

are not allowed for the AMT, you must

10-year write-off for the regular tax.

gain is less than the regular tax gain, or

first reduce the passive activity loss by

those amounts. The result is a passive

Mining exploration and development

tax gain, enter the adjustment as a

activity loss for the AMT of $3,400. You

costs deducted in full for the regular tax in

negative amount.

then enter this amount on the AMT Form

the tax year they were paid or incurred

8582 and refigure the allowable passive

The AMT amount of any gain or loss

must be capitalized and amortized over

activity loss for the AMT.

from activities for which you are not at risk

10 years for the AMT. Enter the difference

is likely to differ from the regular tax

between the regular tax and AMT

The amount of any AMT passive

amount. Your AMT basis in partnerships

deduction. If the AMT deduction is

TIP

activity loss that is not deductible

and S corporations is also likely to differ

greater, enter the difference as a negative

and is carried forward is likely to

from your regular tax basis. Therefore,

amount.

differ from the regular tax amount, if any.

keep adequate records for both the AMT

Therefore, keep adequate records for

If you had a loss on property for which

and regular tax.

both the AMT and regular tax.

mining costs have not been fully

Enter any adjustment for amounts

amortized for the AMT, your AMT

Enter the difference between the

reported on Schedule D, Form 4684, or

deduction is the smaller of (a) the loss

amount that would be reported for the

Form 4797 for the activity on line 16

allowable for the costs had they remained

activity on Schedule C, C-EZ, E, or F or

instead of line 19.

capitalized or (b) the remaining costs to

Form 4835, Farm Rental Income and

be amortized for the AMT.

Expenses, for the AMT and the regular

Line 20—Circulation Costs

tax amount. If (a) the AMT loss is more

Note. Do not make this adjustment for

Line 23—Research and

than the regular tax loss, (b) the AMT

costs for which you elected the optional

Experimental Costs

gain is less than the regular tax gain, or

3-year write-off for the regular tax.

Note. Do not make this adjustment for

Circulation costs (expenditures to

costs paid or incurred in connection with

tax gain, enter the adjustment as a

establish, maintain, or increase the

an activity in which you materially

negative amount.

circulation of a newspaper, magazine, or

participated under the passive activity

Enter any adjustment for amounts

other periodical) deducted in full for the

rules or for costs for which you elected

reported on Schedule D, Form 4684, or

regular tax in the year they were paid or

the optional 10-year write-off for the

Form 4797 for the activity on line 16

incurred must be capitalized and

regular tax.

instead of line 18. See the instructions for

amortized over 3 years for the AMT. Enter

line 16.

Research and experimental costs

the difference between the regular tax

deducted in full for the regular tax in the

Publicly Traded Partnership (PTP)

and AMT deduction. If the AMT deduction

tax year they were paid or incurred must

is greater, enter the difference as a

If you had a loss from a PTP, refigure the

be capitalized and amortized over 10

negative amount.

loss using any AMT adjustments and

years for the AMT. Enter the difference

preferences and any AMT prior year

If you had a loss on property for which

between the regular tax and AMT

unallowed loss.

circulation costs have not been fully

deduction. If the AMT deduction is

amortized for the AMT, your AMT

greater, enter the difference as a negative

Tax Shelter Passive Farm

deduction is the smaller of (a) the amount

amount.

Activities

of the loss allowable for the costs had

Refigure any gain or loss from a tax

If you had a loss on property for which

they remained capitalized or (b) the

shelter passive farm activity taking into

research and experimental costs have not

remaining costs to be amortized for the

account all AMT adjustments and

been fully amortized for the AMT, your

AMT.

preferences and any AMT prior year

AMT deduction is the smaller of (a) the

Line 21—Long-Term Contracts

unallowed losses. If the amount is a gain,

loss allowable for the costs had they

include it on the AMT Form 8582. If the

For the AMT, you generally must use the

remained capitalized or (b) the remaining

amount is a loss, do not include it on the

percentage-of-completion method

costs to be amortized for the AMT.

-5-

Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2006 Page 5

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