Instructions For Form 6251 - Alternative Minimum Tax - Individuals

Line 24—Installment Sales

Depreciation Figured Using

insolvent (see section 58(c)(1)). A

refigured loss may not be used in the

Pre-1987 Rules

The installment method does not apply for

current tax year to offset gains from other

the AMT to any nondealer disposition of

This preference generally only applies to

tax shelter farm activities. Instead, any

property after August 16, 1986, but before

property placed in service after 1987, but

refigured loss must be suspended and

January 1, 1987, if an installment

depreciated using pre-1987 rules due to

carried forward indefinitely until (a) you

obligation to which the proportionate

transitional provisions of the Tax Reform

have a gain in a subsequent tax year from

disallowance rule applied arose from the

Act of 1986.

that same activity or (b) you dispose of

disposition. Enter on line 24 the amount

For the AMT, you must use the straight

the activity.

of installment sale income reported for the

line method to figure depreciation on real

regular tax.

Enter the difference between the

property for which accelerated

amount that would be reported for the

depreciation was determined using

Line 25—Intangible Drilling

activity on Schedule E or F or Form 4835

pre-1987 rules. Use a recovery period of

for the AMT and the regular tax amount. If

Costs (IDCs)

19 years for 19-year real property and 15

(a) the AMT loss is more than the regular

years for low-income housing. For leased

Note. Do not make this adjustment for

tax loss, (b) the AMT gain is less than the

personal property other than recovery

costs for which you elected the optional

regular tax gain, or (c) you have an AMT

property, enter the amount by which your

60-month write-off for the regular tax.

loss and a regular tax gain, enter the

regular tax depreciation using the

adjustment as a negative amount.

pre-1987 rules exceeds the depreciation

IDCs from oil, gas, and geothermal

allowable using the straight line method.

wells are a preference to the extent that

Enter any adjustment for amounts

For leased 10-year recovery property and

the excess IDCs exceed 65% of the net

reported on Schedule D, Form 4684, or

leased 15-year public utility property,

income from the wells. Figure the

Form 4797 for the activity on line 16

enter the amount by which your regular

preference for all oil and gas properties

instead of line 26.

tax depreciation exceeds the depreciation

separately from the preference for all

Charitable Contributions of Certain

allowable using the straight line method

geothermal properties.

Property

with a half-year convention, no salvage

Excess IDCs. Figure excess IDCs as

value, and a recovery period of 15 years

If you made a charitable contribution of

follows.

(22 years for 15-year public utility

property to which section 170(e) applies

property).

and you had a different basis for AMT

Step 1. Determine the amount of your

purposes, you may have to make an

Figure the excess of the regular tax

IDCs allowed for the regular tax under

adjustment. See section 170(e) for

depreciation over the AMT depreciation

section 263(c), but do not include any

details.

separately for each property and include

section 263(c) deduction for

on line 26 only positive amounts.

nonproductive wells.

Alcohol, Biodiesel, and Renewable

Diesel Fuels Credits

Patron’s Adjustment

Step 2. Subtract the amount that

If your taxable income includes an

Distributions you received from a

would have been allowed had you

amount from the alcohol fuel credit or the

cooperative may be includible in income.

amortized these IDCs over a 120-month

biodiesel and renewable diesel fuels

Unless the distributions are nontaxable,

period starting with the month the well

credit under section 87, include that

include on line 26 the total AMT

was placed in production. If you prefer not

amount as a negative amount on line 26.

patronage dividend adjustment reported

to use the 120-month period, you can

to you by the cooperative, such as on

elect to use any method that is

Related Adjustments

Form 1099-PATR.

permissible in determining cost depletion.

If you have an entry on line 8 because

Pollution Control Facilities

you deducted investment interest

Net income. Determine net income by

allocable to an interest in a trade or

The section 169 election to amortize the

reducing the gross income that you

business, or on line 9, 12, 13, or 15

basis of a certified pollution control facility

received or accrued during the tax year

through 25, or you have any amount

over a 60-month or 84-month period is

from all oil, gas, and geothermal wells by

included on line 26 from pre-1987

not available for the AMT. For facilities

the deductions allocable to those wells

depreciation, patron’s adjustment,

placed in service before 1999, figure the

(reduced by the excess IDCs). When

pollution control facilities, or tax shelter

AMT deduction using ADS. For facilities

refiguring net income, use only income

farm activities, you may have to refigure

placed in service after 1998, figure the

and deductions allowed for the AMT.

any item of income or deduction based on

AMT deduction under MACRS using the

a limit of income other than AGI or

Exception. The preference for IDCs from

straight line method. Enter the difference

modified AGI.

oil and gas wells does not apply to

between the regular tax and AMT

taxpayers who are independent

deduction. If the AMT amount is greater,

Affected items include the following.

•

producers (that is, not integrated oil

enter the difference as a negative

Section 179 expense deduction (Form

companies as defined in section

amount.

4562, line 12).

•

291(b)(4)). However, this benefit may be

Expenses for business or rental use of

Tax Shelter Farm Activities

limited. First, figure the IDC preference as

your home.

•

if this exception did not apply. Then, for

Figure this adjustment only if you have a

Conservation expenses (Schedule F,

gain or loss from a tax shelter farm

purposes of this exception, complete

line 14).

•

activity (as defined in section 58(a)(2))

Form 6251 through line 26, including the

Taxable IRA distributions (Form 1040,

that is not a passive activity. If the activity

IDC preference, and combine lines 1

line 15b, or Form 1040NR, line 16b), if

is passive, you must include it with your

through 26. If the amount of the IDC

prior year IRA deductions were different

other passive activities on line 18.

preference exceeds 40% of the total of

for the AMT and the regular tax.

•

lines 1 through 26, enter the excess on

Refigure all gains and losses you

Self-employed health insurance

line 25 (your benefit from this exception is

reported for the regular tax from tax

deduction (Form 1040, line 29, or Form

limited). Otherwise, do not enter an

shelter farm activities by taking into

1040NR, line 28).

•

amount on line 25 (your benefit from this

account any AMT adjustments and

Self-employed SEP, SIMPLE, and

exception is not limited).

preferences. Determine your tax shelter

qualified plans deduction (Form 1040, line

farm activity gain or loss for the AMT

28, or Form 1040NR, line 27).

•

Line 26—Other Adjustments

using the same rules you used for the

IRA deduction (Form 1040, line 32, or

Enter on line 26 the total of any other

regular tax with the following

Form 1040NR, line 31), affected by the

adjustments that apply to you, including

modifications. No refigured loss is

earned income limitation of section

the following.

allowed, except to the extent you are

219(b)(1)(B).

-6-

Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2006 Page 6

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