Instructions For Form 6251 - Alternative Minimum Tax-Individuals

If you had a loss on property for

amortized for the AMT, your AMT

under section 263(c), but don’t include

which circulation costs have not been

deduction is the smaller of (a) the loss

any section 263(c) deduction for

fully amortized for the AMT, your AMT

allowable for the costs had they

nonproductive wells.

deduction is the smaller of (a) the loss

remained capitalized or (b) the

Step 2. Subtract from the amount

allowable for the costs had they

remaining costs to be amortized for the

determined in step 1 the amount that

remained capitalized or (b) the

AMT.

would have been allowed had you

remaining costs to be amortized for the

Line 24—Research and

amortized these IDCs over a 120-month

AMT.

period starting with the month the well

Experimental Costs

Line 22—Long-Term Contracts

was placed in production. If you prefer

Don’t make this adjustment for

not to use the 120-month period, you

To avoid duplication, any AMT

costs paid or incurred in

can elect to use any method that is

adjustment or tax preference

connection with an activity in

permissible in determining cost

CAUTION

item taken into account on this

which you materially participated under

depletion.

CAUTION

line shouldn’t be taken into account in

the passive activity rules or for costs for

Net income. Determine net income by

figuring the amount to enter on any

which you elected the optional 10-year

reducing the gross income that you

other adjustment or tax preference item

write-off for the regular tax.

received or accrued during the tax year

line of this form.

Research and experimental costs

from all oil, gas, and geothermal wells

For the AMT, you generally must use

deducted in full for the regular tax in the

by the deductions allocable to those

the percentage-of-completion method

tax year they were paid or incurred must

wells (reduced by the excess IDCs).

described in section 460(b) to

be capitalized and amortized over 10

When refiguring net income, use only

determine your income from any

years for the AMT. Enter the difference

income and deductions allowed for the

long-term contract (defined in section

between the regular tax and AMT

AMT.

460(f)). However, this rule doesn’t apply

deduction. If the AMT deduction is more

Exception. The preference for IDCs

to any home construction contract (as

than the regular tax deduction, enter the

from oil and gas wells doesn’t apply to

defined in section 460(e)(6)). For

difference as a negative amount.

taxpayers who are independent

contracts excepted from the

producers (that is, not integrated oil

percentage-of-completion method for

If you had a loss on property for

companies as defined in section 291(b)

the regular tax by section 460(e)(1), use

which research and experimental costs

(4)). However, this benefit may be

the simplified procedures for allocating

haven’t been fully amortized for the

limited. First, figure the IDC preference

costs outlined in section 460(b)(3) to

AMT, your AMT deduction is the smaller

as if this exception didn’t apply. Then,

determine the percentage of

of (a) the loss allowable for the costs

for purposes of this exception, complete

completion.

had they remained capitalized or (b) the

Form 6251 through line 27, including the

remaining costs to be amortized for the

Enter the difference between the

IDC preference and treating line 11 as if

AMT.

AMT and regular tax income. If the AMT

it were zero, and combine lines 1

Line 25—Installment Sales

income is smaller, enter the difference

through 27. If the amount of the IDC

as a negative amount.

preference exceeds 40% of the total of

The installment method doesn’t apply

lines 1 through 27 (figured as described

for the AMT to any nondealer

Note. If you are required to use the

in the preceding sentence), enter the

disposition of property after August 16,

percentage-of-completion method for

excess on line 26 (your benefit from this

1986, but before January 1, 1987, if an

either the regular tax or the AMT, you

exception is limited). Otherwise, don’t

installment obligation to which the

may owe or be entitled to a refund of

enter an amount on line 26 (your benefit

proportionate disallowance rule applied

interest for the tax year the contract is

from this exception isn’t limited).

arose from the disposition. Enter the

completed or adjusted. For details, see

amount of installment sale income

Line 27—Other Adjustments

Form 8697, Interest Computation Under

reported for the regular tax as a

the Look-Back Method for Completed

Enter on line 27 the total of any other

negative amount on line 25.

Long-Term Contracts.

adjustments that apply to you, including

Line 26—Intangible Drilling

the following.

Line 23—Mining Costs

Costs (IDCs)

Don’t make this adjustment for

Depreciation Figured Using

Don’t make this adjustment for

costs for which you elected the

Pre-1987 Rules

costs for which you elected the

optional 10-year write-off for the

optional 60-month write-off for

CAUTION

This preference generally applies only

regular tax.

CAUTION

the regular tax.

to property placed in service after 1987,

Mining exploration and development

but depreciated using pre-1987 rules

IDCs from oil, gas, and geothermal

costs deducted in full for the regular tax

due to transitional provisions of the Tax

wells are a preference to the extent that

in the tax year they were paid or

Reform Act of 1986.

the excess IDCs are more than 65% of

incurred must be capitalized and

the net income from the wells. Figure

For the AMT, you must use the

amortized over 10 years for the AMT.

the preference for all oil and gas

straight line method to figure

Enter the difference between the regular

properties separately from the

depreciation on real property for which

tax and AMT deduction. If the AMT

preference for all geothermal properties.

accelerated depreciation was

deduction is more than the regular tax

determined using pre-1987 rules. Use a

deduction, enter the difference as a

Excess IDCs. Figure excess IDCs as

recovery period of 19 years for 19-year

negative amount.

follows.

real property and 15 years for

Step 1. Determine the amount of

If you had a loss on property for

low-income housing. For leased

your IDCs allowed for the regular tax

which mining costs haven’t been fully

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Instructions for Form 6251 (2017)

Instructions For Form 6251 - Alternative Minimum Tax-Individuals - 2017 Page 8

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