Instructions For Form 6251 - Alternative Minimum Tax - Individuals

on line 8 of the AMT Form 4952 in the

preference item must be included on this

property reported on Form 4797, Sales of

same way you did for the regular tax.

line.

Business Property;

Enter on Form 6251, line 8, the difference

2. Casualty gain or loss to business or

Line 12—Qualified Small

between the amount allowed on Schedule

income-producing property reported on

Business Stock

E for the regular tax and the amount

Form 4684, Casualties and Thefts;

allowed on Schedule E for the AMT.

If you claimed the exclusion under section

3. Ordinary income from the

1202 for gain on qualified small business

disposition of property not already taken

Line 9—Depletion

stock held more than 5 years, multiply the

into account in (1) or (2) above or on any

You must refigure your depletion

excluded gain (as shown on Schedule D

other line on Form 6251, such as a

deduction for the AMT. To do so, use only

(Form 1040)) by 7% (.07). Enter the result

disqualifying disposition of stock acquired

income and deductions allowed for the

on line 12 as a positive amount.

in a prior year by exercising an incentive

AMT when refiguring the limit based on

stock option; and

Line 13—Exercise of Incentive

taxable income from the property under

4. Capital gain or loss (including any

Stock Options

section 613(a) and the limit based on

carryover that is different for the AMT)

taxable income, with certain adjustments,

For the regular tax, no income is

reported on Schedule D (Form 1040),

under section 613A(d)(1). Also, your

recognized when an incentive stock

Capital Gains and Losses.

depletion deduction for mines, wells, and

option (ISO), as defined in section 422(b),

First figure any ordinary income

other natural deposits under section 611

is exercised. However, this rule does not

adjustment related to (3) above. Then,

is limited to the property’s adjusted basis

apply for the AMT. Instead, you generally

refigure Form 4684, Form 4797, and

at the end of the year, as refigured for the

must include on line 13 the excess, if any,

Schedule D for the AMT, if applicable, by

AMT, unless you are an independent

of:

taking into account any adjustments you

producer or royalty owner claiming

1. The fair market value of the stock

made this year or in previous years that

percentage depletion for oil and gas wells

acquired through exercise of the option

affect your basis or otherwise result in a

under section 613A(c). Figure this limit

(determined without regard to any lapse

different amount for the AMT.

separately for each property. When

restriction) when your rights in the

refiguring the property’s adjusted basis,

acquired stock first become transferable

If you have a capital loss after

take into account any AMT adjustments

or when these rights are no longer subject

refiguring Schedule D for the AMT, apply

you made this year or in previous years

to a substantial risk of forfeiture, over

the $3,000 capital loss limitation

that affect basis (other than current year

2. The amount you paid for the stock,

separately to the AMT loss. Because the

depletion).

including any amount you paid for the ISO

amount of your gains and losses may be

used to acquire the stock.

different for the AMT, the amount of any

Enter the difference between the

capital loss carryover also may be

regular tax and AMT deduction. If the

Note. Even if your rights in the stock are

different for the AMT. See the example

AMT deduction is greater, enter the

not transferable and are subject to a

that begins below. To figure your AMT

difference as a negative amount.

substantial risk of forfeiture, you may

capital loss carryover, fill out an AMT

Line 10—Net Operating Loss

elect to include in AMT income the

Capital Loss Carryover Worksheet in the

excess of the stock’s fair market value

Deduction

Schedule D instructions.

(determined without regard to any lapse

If you are filing Form 1040NR, enter your

For each of the four items listed

restriction) over the exercise price upon

net operating loss deduction from Form

earlier, figure the difference between the

the transfer to you of the stock acquired

1040NR, line 21, as a positive amount.

amount included in taxable income for the

through exercise of the option. You must

regular tax and the amount included in

Line 11—Interest From Private

make the election by the 30th day after

income for the AMT. Treat the difference

the date of the transfer. See Pub. 525,

Activity Bonds

as a negative amount if (a) both the AMT

Taxable and Nontaxable Income, for

Enter on line 11 interest you earned on

and regular tax amounts are zero or more

more details.

“specified private activity bonds” reduced

and the AMT amount is less than the

If you acquired stock by exercising an

(but not below zero) by any deduction that

regular tax amount or (b) the AMT

ISO and you disposed of that stock in the

would have been allowable if the interest

amount is a loss, and the regular tax

same year, the tax treatment under the

were includible in gross income for the

amount is a smaller loss or zero or more.

regular tax and the AMT is the same, and

regular tax. Each payer of this type of

Enter on line 16 the combined

no adjustment is required.

interest should send you a Form

adjustments for the four items listed

1099-INT showing the amount of this

Increase your AMT basis in any stock

earlier.

interest in box 9. Generally, the term

acquired through the exercise of an ISO

Example. On March 13, 2006, Victor

“specified private activity bond” means

by the amount of the adjustment. Keep

Ash, whose filing status is single, paid

any private activity bond (as defined in

adequate records for both the AMT and

$20,000 to exercise an incentive stock

section 141) issued after August 7, 1986.

regular tax so that you can figure your

option (which was granted to him on

See section 57(a)(5) for exceptions and

adjustment. See the instructions for

January 2, 2005) to buy 200 shares of

more details.

line 16.

stock worth $200,000. The $180,000

Do not include interest on qualified

Line 15—Large Partnerships

difference between his cost and the value

Gulf Opportunity Zone bonds described in

of the stock at the time he exercised the

If you were a partner in an electing large

section 1400N(a).

option is not taxable for the regular tax.

partnership, enter the amount from

Exempt-interest dividends paid by a

His regular tax basis in the stock at the

Schedule K-1 (Form 1065-B), box 6. Take

regulated investment company are

end of 2006 is $20,000. For the AMT,

into account any amount from box 5 on

treated as interest income on specified

however, Ash must include the $180,000

Form 6251, line 18.

private activity bonds to the extent the

as an adjustment on his 2006 Form 6251.

Line 16—Disposition of

dividends are attributable to interest on

His AMT basis in the stock at the end of

Property

the bonds received by the company,

2006 is $200,000.

minus an allocable share of the expenses

Your AMT gain or loss from the

On January 20, 2007, Ash sold 100 of

paid or incurred by the company in

disposition of property may be different

the shares for $75,000. Because Ash did

earning the interest. This amount should

from your gain or loss for the regular tax.

not hold these shares more than 1 year,

also be reported to you on Form

This is because the property may have a

that sale is a disqualifying disposition. For

1099-INT in box 9.

different adjusted basis for the AMT. Use

the regular tax, Ash has ordinary income

this line to report any AMT adjustment

If you are filing Form 8814, Parents’

of $65,000 (proceeds minus his $10,000

resulting from refiguring:

Election To Report Child’s Interest and

basis in the 100 shares). Ash has no

Dividends, any tax-exempt interest

1. Gain or loss from the sale,

capital gain or loss for the regular tax

income from line 1b of that form that is a

exchange, or involuntary conversion of

resulting from the sale. For the AMT, Ash

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Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2007 Page 3

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