Instructions For Form 6251 - Alternative Minimum Tax - Individuals

deduction, enter the difference as a

account all AMT adjustments and

Line 21—Long-Term Contracts

negative amount.

preferences and any AMT prior year

For the AMT, you generally must use the

unallowed losses. If the amount is a gain,

In addition to the AMT adjustment to

percentage-of-completion method

include it on the AMT Form 8582. If the

your deduction for depreciation, you must

described in section 460(b) to determine

amount is a loss, do not include it on the

also adjust the amount of depreciation

your income from any long-term contract

AMT Form 8582. Carry the loss forward

that was capitalized, if any, to account for

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

to 2008 to see if you have a gain or loss

the difference between the rules for the

rule does not apply to any home

from tax shelter passive farm activities for

regular tax and the AMT. Include on this

construction contract (as defined in

2008.

line the current year adjustment to taxable

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

income, if any, resulting from the

from the percentage-of-completion

Insolvency

difference.

method for the regular tax by section

If at the end of the tax year your liabilities

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

Line 18—Passive Activities

exceed the fair market value of your

procedures for allocating costs outlined in

assets, increase your passive activity loss

Your passive activity gains and losses

section 460(b)(3) to determine the

allowed by that excess (but not by more

must be refigured for the AMT by taking

percentage of completion.

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

into account all adjustments and

Enter the difference between the AMT

preferences and any AMT prior year

Line 19—Loss Limitations

and regular tax income. If the AMT

unallowed losses that apply to that

income is smaller, enter the difference as

For passive activities, see the line 18

activity. You may fill out a second Form

a negative amount.

instructions instead. For tax shelter farm

8582, Passive Activity Loss Limitations,

activities (that are not passive), see the

Note. If you are required to use the

and the other forms or schedules on

line 26 instructions that begin on page 6.

percentage-of-completion method for

which your passive activities are reported,

either the regular tax or the AMT, you

Refigure your gains and losses from

to determine your passive activity loss

may owe or be entitled to a refund of

activities for which you are not at risk and

allowed for the AMT, but do not file the

interest for the tax year the contract is

basis limitations applicable to

second set of forms and schedules with

completed or adjusted. For details, see

partnerships and S corporations by taking

your tax return.

Form 8697, Interest Computation Under

into account all AMT adjustments and

Example. You are a partner in a

the Look-Back Method for Completed

preferences that apply. See sections

partnership and the Schedule K-1 (Form

Long-Term Contracts.

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

1065) you received shows the following.

•

Line 22—Mining Costs

Enter the difference between the

A passive activity loss of $4,125,

•

amount that would be reported for the

A depreciation adjustment of $500 on

Note. Do not make this adjustment for

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

post-1986 property, and

costs for which you elected the optional

•

Form 4835 for the AMT and the regular

An adjustment of $225 on the

10-year write-off for the regular tax.

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

disposition of property.

Mining exploration and development

than the regular tax loss, (b) the AMT

Because the two adjustments above

costs deducted in full for the regular tax in

gain is less than the regular tax gain, or

are not allowed for the AMT, you must

the tax year they were paid or incurred

first reduce the passive activity loss by

must be capitalized and amortized over

tax gain, enter the adjustment as a

those amounts. The result is a passive

10 years for the AMT. Enter the difference

negative amount.

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

between the regular tax and AMT

The AMT amount of any gain or loss

then enter this amount on the AMT Form

deduction. If the AMT deduction is

8582 and refigure the allowable passive

from activities for which you are not at risk

greater, enter the difference as a negative

is likely to differ from the regular tax

activity loss for the AMT.

amount.

amount. Your AMT basis in partnerships

If you had a loss on property for which

The amount of any AMT passive

and S corporations is also likely to differ

mining costs have not been fully

TIP

activity loss that is not deductible

from your regular tax basis. Therefore,

amortized for the AMT, your AMT

and is carried forward is likely to

keep adequate records for both the AMT

deduction is the smaller of (a) the loss

differ from the regular tax amount, if any.

and regular tax.

allowable for the costs had they remained

Therefore, keep adequate records for

Enter any adjustment for amounts

capitalized or (b) the remaining costs to

both the AMT and regular tax.

reported on Schedule D, Form 4684, or

be amortized for the AMT.

Enter the difference between the

Form 4797 for the activity on line 16

Line 23—Research and

amount that would be reported for the

instead of line 19.

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

Experimental Costs

Line 20—Circulation Costs

Form 4835, Farm Rental Income and

Note. Do not make this adjustment for

Expenses, for the AMT and the regular

Note. Do not make this adjustment for

costs paid or incurred in connection with

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

costs for which you elected the optional

an activity in which you materially

than the regular tax loss, (b) the AMT

3-year write-off for the regular tax.

participated under the passive activity

gain is less than the regular tax gain, or

rules or for costs for which you elected

Circulation costs (expenditures to

the optional 10-year write-off for the

establish, maintain, or increase the

tax gain, enter the adjustment as a

regular tax.

circulation of a newspaper, magazine, or

negative amount.

other periodical) deducted in full for the

Research and experimental costs

Enter any adjustment for amounts

regular tax in the year they were paid or

deducted in full for the regular tax in the

reported on Schedule D, Form 4684, or

incurred must be capitalized and

tax year they were paid or incurred must

Form 4797 for the activity on line 16

amortized over 3 years for the AMT. Enter

be capitalized and amortized over 10

instead of line 18. See the instructions for

the difference between the regular tax

years for the AMT. Enter the difference

line 16 that begin on page 3.

and AMT deduction. If the AMT deduction

between the regular tax and AMT

is greater, enter the difference as a

Publicly Traded Partnership (PTP)

deduction. If the AMT deduction is

negative amount.

greater, enter the difference as a negative

If you had a loss from a PTP, refigure the

amount.

If you had a loss on property for which

loss using any AMT adjustments and

circulation costs have not been fully

If you had a loss on property for which

preferences and any AMT prior year

amortized for the AMT, your AMT

research and experimental costs have not

unallowed loss.

deduction is the smaller of (a) the amount

been fully amortized for the AMT, your

Tax Shelter Passive Farm

of the loss allowable for the costs had

AMT deduction is the smaller of (a) the

Activities

they remained capitalized or (b) the

loss allowable for the costs had they

Refigure any gain or loss from a tax

remaining costs to be amortized for the

remained capitalized or (b) the remaining

shelter passive farm activity taking into

AMT.

costs to be amortized for the AMT.

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Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2007 Page 5

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