Instructions For Form 6395

2013 Alaska Passive Activity Limitation

GENERAL INSTRUCTIONS

Line 2b: Alaska does not allow credits for backup withholding,

credit for employer social security and Medicare taxes paid

on certain employee tips, and other federal credits that are tax

Purpose of Form

reimbursements. See 15 AAC 20.145(f). Also note that Alaska

Form 6395 limits federal-based credits from passive activities,

does not adopt Internal Revenue Code Sections 1400–1400U,

and supports Form 6390 Alaska Federal-based Credits.

This

which may affect allowable federal-based credits.

form is required if such credits are to be claimed on Form 6000,

6020, 6100, or 6150. Under AS 43.20.021(d), where a credit

Lines 5a–5c: These are federal “specified credits” from a passive

allowed under the Internal Revenue Code is also allowed in

activity that are not allowable for Alaska purposes. See instructions

computing Alaska income tax, it is limited to 18% of the amount

for Lines 2a and 2b above.

of credit determined for federal income tax purposes and

apportioned, if applicable

Line 10: This amount is the total potential federal-based credits,

before 18% limitation and before apportionment, subject to the tax

Adoption Of The Internal Revenue Code

limitation.

Under AS 43.20.021, Alaska adopts the Internal Revenue Code,

Sections 1–1399 and 6001–7872, with full force and effect,

unless excepted to or modified by provisions of Alaska law. In

Line 11:

Enter the apportionment factor from the applicable

Schedule I from Form 6000, 6100, or 6150.

addition, AS 43.20.160 and AS 43.20.300 require the Department

to apply, as far as practicable, the administrative and judicial

Line 14: Enter the unallowed passive activity credits from the

interpretations of the federal income tax law.

previous years, after the 18% limitation and post-apportionment

(using the apportionment factor in the year generated). Attach a

Note that Alaska law does not adopt Internal Revenue Code

schedule of each credit, by year generated and used.

Sections 1400–1400U, which grant tax benefits for activities in

certain geographic zones, including those in “Enterprise Zones”

and “Gulf Opportunity Zones.” If the taxpayer qualifies for special

Line 15: This is the amount of federal-based credits (after 18%

limitation and apportionment) subject to the Alaska tax limitation.

federal treatment under these code sections, this may require

that the taxpayer recompute some federal-based credits for

Line 16: Calculate the Alaska tax attributable to net passive

Alaska purposes.

income and net active income, by applying federal rules explained

in the instructions for line 7 of the federal Form 8810, on an as-if

Alaska basis. Use the Alaska income tax rates in AS 43.20.011,

Other Related Forms

when calculating “tax attributable” amounts. In place of federal

Form 6390 is required to claim credits reported on Form 6395.

“income tax before credits,” use the Alaska regular income tax

Both forms are required to be attached to Form 6000, 6020,

(Schedule D, line 7 of Form 6000, 6020, 6100, or 6150) less

6100, or 6150 to claim such federal-based credits.

Alaska incentive credits allowed against regular tax (from Form

6390, line 12b).

If You Need Help

If you have questions, need additional information or require

Line 17: The amount of unallowed passive activity credits on

other assistance, see our website at , or

line 17 must be allocated to the credit baskets (general business

call:

credits, “specified credits,” and eligible small business credits).

This is done for each credit basket, based on a ratio of credits

Juneau: 907-465-2320

before tax limitation. Complete Worksheets A and B below to

Anchorage: 907-269-6620

allocate the credits. (The amount on line 17 is after 18% limitation

and apportionment, if applicable.)

Form 6395 identifies potential federal credits from passive

activities that are allowable for Alaska purposes. The allowable

Line 18: The amount of allowed passive activity credits on line 18

passive credits are subject to tax limitations, computed on an

must be allocated to the credit baskets (general business credits,

Alaska basis. The credits are calculated in the same manner

“specified credits,” and eligible small business credits). This is

as the federal credits. Alaska does not allow credits for backup

done for each credit basket, based on a ratio of credits before

withholding, credit for employer social security and Medicare

tax limitation. Complete Worksheets A and B below to allocate

taxes paid on certain employee tips, and other federal credits

the credits. (The amount on line 18 is after 18% limitation and

that are tax reimbursements. See 15 AAC 20.145(f). Also note

apportionment, if applicable.)

that Alaska does not adopt Internal Revenue Code Sections

1400–1400U, which may affect allowable federal-based credits.

Line 19: The purpose of line 19 is to gross-up the credits on

line 18 to an amount that is pre-18% and pre-apportionment, if

SPECIFIC INSTRUCTIONS

applicable (“gross”).

Line 2a: Alaska allows the federal investment credit only to the

Line 20: Enter the amount of allowed passive general business

extent attributable to Alaska property. See AS 43.20.036(b). On

credits (at “gross”) from Worksheet B below, here and on Form

line 2a enter the amount of federal investment credit, attributable

6390, line 4.

to passive activities, that is not attributable to Alaska property.

0405-6395i Rev 01/02/14 - page 1

Instructions For Form 6395 - Alaska Passive Activity Limitation - 2013

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