Instructions For Form 6251 - 2008 (Page 6 of 12) in pdf

Tax Shelter Passive Farm

regular tax and AMT deduction. If the

Line 24—Research and

AMT deduction is greater, enter the

Activities

Experimental Costs

difference as a negative amount.

Refigure any gain or loss from a tax

shelter passive farm activity taking into

Do not make this adjustment for

If you had a loss on property for

account all AMT adjustments and

costs paid or incurred in

which circulation costs have not been

preferences and any AMT prior year

connection with an activity in

CAUTION

fully amortized for the AMT, your AMT

unallowed losses. If the amount is a

which you materially participated under

deduction is the smaller of (a) the

gain, include it on the AMT Form 8582.

the passive activity rules or for costs for

amount of the loss allowable for the

If the amount is a loss, do not include it

which you elected the optional 10-year

costs had they remained capitalized or

on the AMT Form 8582. Carry the loss

write-off for the regular tax.

(b) the remaining costs to be amortized

forward to 2009 to see if you have a

Research and experimental costs

for the AMT.

gain or loss from tax shelter passive

deducted in full for the regular tax in the

farm activities for 2009.

tax year they were paid or incurred

must be capitalized and amortized over

Insolvency

Line 22—Long-Term

10 years for the AMT. Enter the

If at the end of the tax year your

Contracts

difference between the regular tax and

liabilities exceed the fair market value

For the AMT, you generally must use

AMT deduction. If the AMT deduction is

of your assets, increase your passive

the percentage-of-completion method

greater, enter the difference as a

activity loss allowed by that excess (but

described in section 460(b) to

negative amount.

not by more than your total loss). See

determine your income from any

If you had a loss on property for

section 58(c)(1).

long-term contract (defined in section

which research and experimental costs

460(f)). However, this rule does not

Line 20—Loss Limitations

have not been fully amortized for the

apply to any home construction contract

AMT, your AMT deduction is the

For passive activities, see the line 19

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

smaller of (a) the loss allowable for the

instructions instead. For tax shelter

contracts excepted from the

costs had they remained capitalized or

farm activities (that are not passive),

percentage-of-completion method for

(b) the remaining costs to be amortized

see the line 27 instructions that begin

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

for the AMT.

on page 7.

you must use the simplified procedures

Refigure your gains and losses from

Line 25—Installment Sales

for allocating costs outlined in section

activities for which you are not at risk

460(b)(3) to determine the percentage

The installment method does not apply

and basis limitations applicable to

of completion.

for the AMT to any nondealer

partnerships and S corporations by

disposition of property after August 16,

taking into account all AMT adjustments

1986, but before January 1, 1987, if an

Enter the difference between the

and preferences that apply. See

installment obligation to which the

AMT and regular tax income. If the

sections 59(h), 465, 704(d), and

proportionate disallowance rule applied

AMT income is smaller, enter the

1366(d).

arose from the disposition. Enter the

difference as a negative amount.

Enter the difference between the

amount of installment sale income

amount that would be reported for the

reported for the regular tax as a

Note. If you are required to use the

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

negative amount on line 25.

percentage-of-completion method for

Form 4835 for the AMT and the regular

either the regular tax or the AMT, you

Line 26—Intangible Drilling

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

may owe or be entitled to a refund of

than the regular tax loss, (b) the AMT

Costs (IDCs)

interest for the tax year the contract is

gain is less than the regular tax gain, or

completed or adjusted. For details, see

Do not make this adjustment for

Form 8697, Interest Computation Under

tax gain, enter the adjustment as a

costs for which you elected the

the Look-Back Method for Completed

negative amount.

optional 60-month write-off for

CAUTION

Long-Term Contracts.

The AMT amount of any gain or loss

the regular tax.

from activities for which you are not at

IDCs from oil, gas, and geothermal

risk is likely to differ from the regular tax

Line 23—Mining Costs

wells are a preference to the extent that

amount. Your AMT basis in

the excess IDCs exceed 65% of the net

partnerships and S corporations is also

income from the wells. Figure the

Do not make this adjustment for

likely to differ from your regular tax

preference for all oil and gas properties

costs for which you elected the

basis. Therefore, keep adequate

separately from the preference for all

optional 10-year write-off for the

CAUTION

records for both the AMT and regular

geothermal properties.

regular tax.

tax.

Excess IDCs. Figure excess IDCs as

Enter any adjustment for amounts

follows.

Mining exploration and development

reported on Schedule D, Form 4684, or

costs deducted in full for the regular tax

Step 1. Determine the amount of

Form 4797 for the activity on line 17

in the tax year they were paid or

your IDCs allowed for the regular tax

instead of line 20.

incurred must be capitalized and

under section 263(c), but do not include

Line 21—Circulation Costs

amortized over 10 years for the AMT.

any section 263(c) deduction for

Enter the difference between the

nonproductive wells.

regular tax and AMT deduction. If the

Do not make this adjustment for

Step 2. Subtract the amount that

AMT deduction is greater, enter the

costs for which you elected the

would have been allowed had you

difference as a negative amount.

optional 3-year write-off for the

amortized these IDCs over a

CAUTION

regular tax.

120-month period starting with the

month the well was placed in

If you had a loss on property for

Circulation costs (expenditures to

production. If you prefer not to use the

which mining costs have not been fully

establish, maintain, or increase the

120-month period, you can elect to use

amortized for the AMT, your AMT

circulation of a newspaper, magazine,

any method that is permissible in

or other periodical) deducted in full for

deduction is the smaller of (a) the loss

determining cost depletion.

the regular tax in the year they were

allowable for the costs had they

paid or incurred must be capitalized

remained capitalized or (b) the

Net income. Determine net income by

and amortized over 3 years for the

remaining costs to be amortized for the

reducing the gross income that you

AMT. Enter the difference between the

AMT.

received or accrued during the tax year

-6-

Instructions For Form 6251 - 2008 Page 6

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