Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2007 Page 4
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has no ordinary income, but has a
Property placed in service after 1998
section 179 expense deduction is the
short-term capital loss of $25,000
that is depreciated for the regular tax
same for the regular tax and the AMT.
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(proceeds minus his $100,000 AMT basis
using the 200% declining balance method
Motion picture films, videotapes, or
in the 100 shares).
(generally 3-, 5-, 7-, and 10-year property
sound recordings.
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under the modified accelerated cost
Property depreciated under the
On April 21, 2007, Ash sold the other
recovery system (MACRS), except for
unit-of-production method or any other
100 shares for $60,000. Because he held
qualified property eligible for the special
method not expressed in a term of years.
the shares for more than 1 year, the sale
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depreciation allowance (discussed later
Qualified Indian reservation property.
is not a disqualifying disposition. For the
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on this page));
Qualified revitalization expenditures for
regular tax, Ash has a long-term capital
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a building for which you elected to claim
Section 1250 property placed in service
gain of $50,000 (proceeds minus his
the commercial revitalization deduction
after 1998 that is not depreciated for the
regular tax basis of $10,000). For the
under section 1400I.
regular tax using the straight line method;
AMT, Ash has a long-term capital loss of
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A natural gas gathering line placed in
and
$40,000 (proceeds minus his AMT basis
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service after April 11, 2005.
Tangible property placed in service
of $100,000).
after 1986 and before 1999. (If the
How Is Depreciation Refigured for
Ash has no other sales of stock or
transitional election was made under
the AMT?
other capital assets for 2007. Ash enters
section 203(a)(1)(B) of the Tax Reform
a total negative adjustment of $118,000
Act of 1986, this rule applies to property
Property placed in service before 1999.
on line 16 of his 2007 Form 6251, figured
placed in service after July 31, 1986.)
Refigure depreciation for the AMT using
as follows:
ADS, with the same convention used for
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Ash figures a negative adjustment of
What Depreciation Is Not Refigured
the regular tax. See the following table for
$65,000 for the difference between the
for the AMT?
the method and recovery period to use.
$65,000 of regular tax ordinary income
Do not refigure depreciation for the AMT
and the $0 of AMT ordinary income for
Property Placed in Service Before 1999
for the following.
the first sale.
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Residential rental property placed in
IF the property is...
THEN use the...
For the regular tax, Ash has $50,000
service after 1998.
capital gain net income reported on
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section 1250 property straight line method
Nonresidential real property with a
Schedule D for the second sale. For the
over 40 years.
class life of 27.5 years or more placed in
AMT, Ash has a $25,000 short-term
service after 1998 that is depreciated for
capital loss from the first sale, and a
tangible property
straight line method
the regular tax using the straight line
(other than section
over the property’s
$40,000 long-term capital loss from the
method.
1250 property)
AMT class life.
second sale, resulting in a net capital loss
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Other section 1250 property placed in
depreciated using
of $65,000 for the AMT. However, only
service after 1998 that is depreciated for
straight line method
$3,000 of the $65,000 net capital loss is
the regular tax using the straight line
for the regular tax
allowed for 2007 for the AMT. The
method.
difference between the regular tax
any other tangible
150% declining
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Property (other than section 1250
Schedule D gain of $50,000 and the
property
balance method,
property) placed in service after 1998 that
$3,000 loss allowed for the AMT results in
switching to straight
is depreciated for the regular tax using
a $53,000 negative adjustment to include
line method the first
the 150% declining balance method or
on line 16.
tax year it gives a
the straight line method.
larger deduction, over
Ash has an AMT capital loss carryover
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Property for which you elected to use
the property’s AMT
from 2007 to 2008 of $62,000, of which
the alternative depreciation system (ADS)
class life.
$22,000 is short-term and $40,000 is
of section 168(g) for the regular tax.
long-term. If he has no other Schedule D
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Qualified property that is or was eligible
Property placed in service after 1998.
transactions for 2008, his adjustment
for the special depreciation allowance
Use the same convention and recovery
reported on line 16 of his 2008 Form 6251
under sections 168(k), 168(l) (in the case
period used for the regular tax. For
would be limited to ($3,000), the amount
of qualified cellulosic biomass ethanol
property other than section 1250 property,
of his capital loss limitation for 2008.
plant property), 1400L(b) (in the case of
use the 150% declining balance method,
qualified New York Liberty Zone
Line 17—Post-1986
switching to straight line the first tax year
property), or 1400N(d) (in the case of
Depreciation
it gives a larger deduction. For section
qualified Gulf Opportunity Zone property)
1250 property, use the straight line
This section describes when depreciation
if the depreciable basis of the property for
method.
must be refigured for the AMT and how to
the AMT is the same as for the regular
figure the amount to enter on line 17.
tax. The special allowance is deductible
How Is the AMT Class Life
for the AMT, and there also is no
Do not use line 17 for depreciation
Determined?
adjustment required for any depreciation
related to the following.
The class life used for the AMT is not
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figured on the remaining basis of the
Employee business expenses claimed
necessarily the same as the recovery
qualified property if the depreciable basis
on line 21 of Schedule A (Form 1040) or
period used for the regular tax. The class
of the property for the AMT is the same
line 9 of Schedule A (Form 1040NR).
lives for the AMT are listed in Rev. Proc.
as for the regular tax. Property for which
Take this adjustment into account on
87-56, 1987-2 C.B. 674, and in Pub. 946,
an election is in effect to not have the
line 5.
How To Depreciate Property. Use 12
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special allowance apply is not qualified
Passive activities. Take this adjustment
years for any tangible personal property
property. See sections 168(k) for the
into account on line 18.
not assigned a class life.
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definition of qualified property, 168(l) for
An activity for which you are not at risk
the definition of qualified cellulosic
or income or loss from a partnership or an
See Pub. 946 for tables that may
biomass ethanol plant property,
S corporation if the basis limitations
TIP
be used to figure AMT
1400L(b)(2) for the definition of qualified
apply. Take this adjustment into account
depreciation. Rev. Proc. 89-15,
New York Liberty Zone property, and
on line 19.
1989-1 C.B. 816, has special rules for
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1400N(d)(2) for the definition of qualified
A tax shelter farm activity. Take this
short years and for property disposed of
Gulf Opportunity Zone property.
adjustment into account on line 26.
before the end of the recovery period.
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Any part of the cost of any property for
What Depreciation Must Be
How Is the Adjustment Figured?
which you made the election under
Refigured for the AMT?
section 179 to treat the cost of the
Subtract the AMT deduction for
Generally, you must refigure depreciation
property as a deductible expense. The
depreciation from the regular tax
reduction to the depreciable basis of
for the AMT, including depreciation
deduction and enter the result. If the AMT
section 179 property by the amount of the
allocable to inventory costs, for:
deduction is more than the regular tax
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