Instructions For Form 6251 - Alternative Minimum Tax - Individuals

Line 24—Installment Sales

depreciated using pre-1987 rules due to

have a gain in a subsequent tax year from

transitional provisions of the Tax Reform

that same activity or (b) you dispose of

The installment method does not apply for

Act of 1986.

the activity.

the AMT to any nondealer disposition of

property after August 16, 1986, but before

For the AMT, you must use the straight

Enter the difference between the

January 1, 1987, if an installment

line method to figure depreciation on real

amount that would be reported for the

obligation to which the proportionate

property for which accelerated

activity on Schedule E or F or Form 4835

disallowance rule applied arose from the

depreciation was determined using

for the AMT and the regular tax amount. If

disposition. Enter the amount of

pre-1987 rules. Use a recovery period of

(a) the AMT loss is more than the regular

installment sale income reported for the

19 years for 19-year real property and 15

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

regular tax as a negative amount on

years for low-income housing. For leased

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

line 24.

personal property other than recovery

loss and a regular tax gain, enter the

property, enter the amount by which your

adjustment as a negative amount.

Line 25—Intangible Drilling

regular tax depreciation using the

Enter any adjustment for amounts

Costs (IDCs)

pre-1987 rules exceeds the depreciation

reported on Schedule D, Form 4684, or

Note. Do not make this adjustment for

allowable using the straight line method.

Form 4797 for the activity on line 16

costs for which you elected the optional

For leased 10-year recovery property and

instead of line 26.

60-month write-off for the regular tax.

leased 15-year public utility property,

enter the amount by which your regular

Charitable Contributions of Certain

IDCs from oil, gas, and geothermal

tax depreciation exceeds the depreciation

Property

wells are a preference to the extent that

allowable using the straight line method

the excess IDCs exceed 65% of the net

If you made a charitable contribution of

with a half-year convention, no salvage

income from the wells. Figure the

property to which section 170(e) applies

value, and a recovery period of 15 years

preference for all oil and gas properties

and you had a different basis for AMT

(22 years for 15-year public utility

separately from the preference for all

purposes, you may have to make an

property).

geothermal properties.

adjustment. See section 170(e) for

Figure the excess of the regular tax

details.

Excess IDCs. Figure excess IDCs as

depreciation over the AMT depreciation

follows.

Alcohol, Biodiesel, and Renewable

separately for each property and include

Step 1. Determine the amount of your

Diesel Fuels Credits

on line 26 only positive amounts.

IDCs allowed for the regular tax under

If your taxable income includes an

section 263(c), but do not include any

Patron’s Adjustment

amount from the alcohol fuel credit or the

section 263(c) deduction for

Distributions you received from a

biodiesel and renewable diesel fuels

nonproductive wells.

cooperative may be includible in income.

credit under section 87, include that

Step 2. Subtract the amount that

Unless the distributions are nontaxable,

amount as a negative amount on line 26.

would have been allowed had you

include on line 26 the total AMT

amortized these IDCs over a 120-month

Related Adjustments

patronage dividend adjustment reported

period starting with the month the well

to you by the cooperative, such as on

If you have an entry on line 8 because

was placed in production. If you prefer not

Form 1099-PATR.

you deducted investment interest

to use the 120-month period, you can

allocable to an interest in a trade or

Pollution Control Facilities

elect to use any method that is

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

The section 169 election to amortize the

permissible in determining cost depletion.

through 25, or you have any amount

basis of a certified pollution control facility

Net income. Determine net income by

included on line 26 from pre-1987

over a 60-month or 84-month period is

reducing the gross income that you

depreciation, patron’s adjustment,

not available for the AMT. For facilities

received or accrued during the tax year

pollution control facilities, or tax shelter

placed in service before 1999, figure the

from all oil, gas, and geothermal wells by

farm activities, you may have to refigure

AMT deduction using ADS. For facilities

the deductions allocable to those wells

any item of income or deduction based on

placed in service after 1998, figure the

(reduced by the excess IDCs). When

a limit of income other than AGI or

AMT deduction under MACRS using the

refiguring net income, use only income

modified AGI.

straight line method. Enter the difference

and deductions allowed for the AMT.

Affected items include the following.

between the regular tax and AMT

•

Exception. The preference for IDCs

Section 179 expense deduction (Form

deduction. If the AMT amount is greater,

from oil and gas wells does not apply to

4562, line 12).

enter the difference as a negative

•

taxpayers who are independent

Expenses for business or rental use of

amount.

producers (that is, not integrated oil

your home.

•

companies as defined in section

Tax Shelter Farm Activities

Conservation expenses (Schedule F,

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

line 14).

Figure this adjustment only if you have a

•

limited. First, figure the IDC preference as

Taxable IRA distributions (Form 1040,

gain or loss from a tax shelter farm

if this exception did not apply. Then, for

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

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

purposes of this exception, complete

prior year IRA deductions were different

that is not a passive activity. If the activity

Form 6251 through line 26, including the

for the AMT and the regular tax.

is passive, you must include it with your

•

IDC preference, and combine lines 1

Self-employed health insurance

other passive activities on line 18.

through 26. If the amount of the IDC

deduction (Form 1040, line 29, or Form

Refigure all gains and losses you

preference exceeds 40% of the total of

1040NR, line 28).

reported for the regular tax from tax

•

lines 1 through 26, enter the excess on

Self-employed SEP, SIMPLE, and

shelter farm activities by taking into

line 25 (your benefit from this exception is

qualified plans deduction (Form 1040, line

account any AMT adjustments and

limited). Otherwise, do not enter an

28, or Form 1040NR, line 27).

preferences. Determine your tax shelter

•

amount on line 25 (your benefit from this

IRA deduction (Form 1040, line 32, or

farm activity gain or loss for the AMT

exception is not limited).

Form 1040NR, line 31), affected by the

using the same rules you used for the

earned income limitation of section

Line 26—Other Adjustments

regular tax with the following

219(b)(1)(B).

modifications. No refigured loss is

Enter on line 26 the total of any other

allowed, except to the extent you are

Figure the difference between the AMT

adjustments that apply to you, including

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

and regular tax amount for each item.

the following.

refigured loss may not be used in the

Combine the amounts for all your related

Depreciation Figured Using

current tax year to offset gains from other

adjustments and include the total on line

Pre-1987 Rules

tax shelter farm activities. Instead, any

26. Keep a copy of all computations for

This preference generally only applies to

refigured loss must be suspended and

your records, including any AMT

property placed in service after 1987, but

carried forward indefinitely until (a) you

carryover and basis amounts.

-6-

Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2007 Page 6

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