Instructions For Form 6251 - Alternative Minimum Tax-Individuals

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Property (other than section 1250

Property placed in service after 1998.

then enter this amount on the AMT

property) placed in service after 1998

Use the same convention and recovery

Form 8582 and refigure the allowable

that is depreciated for the regular tax

period used for the regular tax. For

passive activity loss for the AMT.

using the 150% declining balance

property other than section 1250

Note: The amount of any AMT passive

method or the straight line method.

property, use the 150% declining

activity loss that is not deductible and is

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balance method, switching to straight

Property for which you elected to use

carried forward is likely to differ from

line the first tax year it gives a larger

the alternative depreciation system

the regular tax amount, if any.

deduction. For section 1250 property,

(ADS) of section 168(g) for the regular

Therefore, keep adequate records for

use the straight line method.

tax.

both the AMT and regular tax.

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Property that is qualified property

How Is the AMT Class Life

Enter the difference between the

under section 168(k)(2) or 168(k)(4)

Determined?

amount that would be reported for the

(property eligible for the special

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

The class life used for the AMT is not

depreciation allowance). The special

Form 4835, Farm Rental Income and

necessarily the same as the recovery

allowance is deductible for the AMT,

Expenses, for the AMT and the regular

period used for the regular tax. The

and there also is no adjustment

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

class lives for the AMT are listed in

required for any depreciation figured on

than the regular tax loss, (b) the AMT

Rev. Proc. 87-56, 1987-2 C.B. 674, and

the remaining basis of the qualified

gain is less than the regular tax gain, or

in Pub. 946, How To Depreciate

property. Property for which an election

Property. Use 12 years for any tangible

is in effect under section

tax gain, enter the adjustment as a

personal property not assigned a class

168(k)(2)(C)(iii) to not have the special

negative amount.

life.

allowance apply is not qualified

Enter any adjustment for amounts

property. See the Instructions for Form

See Pub. 946 for optional tables

reported on Schedule D, Form 4684, or

4562 for the definition of qualified

TIP

that may be used to figure AMT

Form 4797 for the activity on line 16

property.

depreciation. Rev. Proc. 89-15,

instead of line 18. See the instructions

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1989-1 C.B. 816, has special rules for

Any part of the cost of any property

for line 16.

short years and for property disposed

for which you made the election under

Publicly Traded Partnership

of before the end of the recovery

section 179 to treat the cost of the

(PTP)

period.

property as a deductible expense. The

reduction to the depreciable basis of

If you had a loss from a PTP, refigure

How Is the Adjustment

section 179 property by the amount of

the loss using any AMT adjustments

Figured?

the section 179 expense deduction is

and preferences and any AMT prior

Subtract the AMT deduction for

the same for the regular tax and the

year unallowed loss.

depreciation from the regular tax

AMT.

Tax Shelter Passive Farm

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deduction and enter the result. If the

Motion picture films, videotapes, or

Activities

AMT deduction is more than the regular

sound recordings.

tax deduction, enter the difference as a

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Refigure any gain or loss from a tax

Property depreciated under the

negative amount.

shelter passive farm activity taking into

unit-of-production method or any other

In addition to the AMT adjustment to

account all AMT adjustments and

method not expressed in a term of

your deduction for depreciation, you

preferences and any AMT prior year

years.

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unallowed losses. If the amount is a

must also adjust the amount of

Qualified Indian reservation property.

gain, include it on the AMT Form 8582.

depreciation that was capitalized, if any,

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Qualified revitalization expenditures

to account for the difference between

If the amount is a loss, do not include it

for a building for which you elected to

the rules for the regular tax and the

on the AMT Form 8582. Carry the loss

claim the commercial revitalization

AMT. Include on this line the current

forward to 2004 to see if you have a

deduction under section 1400I.

gain or loss from tax shelter passive

year adjustment to taxable income, if

farm activities for 2004.

any, resulting from the difference.

How Is Depreciation Refigured

Insolvency

Line 18—Passive Activities

for the AMT?

If at the end of the tax year your

Your passive activity gains and losses

Property placed in service before

liabilities exceed the fair market value

must be refigured for the AMT by taking

1999. Refigure depreciation for the

of your assets, increase your passive

into account all adjustments and

AMT using ADS, with the same

activity loss allowed by that excess (but

preferences and any AMT prior year

convention used for the regular tax.

not by more than your total loss). See

unallowed losses that apply to that

See the table below for the method and

section 58(c)(1).

activity. You may fill out a second Form

recovery period to use.

8582, Passive Activity Loss Limitations,

Line 19—Loss Limitations

and the other forms or schedules on

Property Placed in Service Before 1999

For passive activities, see the line 18

which your passive activities are

instructions on this page instead. For

IF the property is... THEN use the...

reported, to determine your passive

tax shelter farm activities (that are not

activity loss allowed for the AMT, but

Section 1250

Straight line method

passive), see the line 26 instructions

do not file the second set of forms and

property.

over 40 years.

beginning on page 5.

schedules with your tax return.

Tangible property

Straight line method

Refigure your gains and losses from

Example. You are a partner in a

(other than section

over the property’s

activities for which you are not at risk

partnership and the Schedule K-1

1250 property)

AMT class life.

and basis limitations applicable to

(Form 1065) you received shows the

depreciated using

partnerships and S corporations by

following.

straight line for the

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taking into account all AMT adjustments

A passive activity loss of $4,125,

regular tax.

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and preferences that apply. See

A depreciation adjustment of $500 on

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

Any other tangible

150% declining

post-1986 property, and

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1366(d).

property.

balance method,

An adjustment of $225 on the

switching to straight

disposition of property.

Enter the difference between the

line the first tax year

Because the two adjustments above

amount that would be reported for the

it gives a larger

are not allowed for the AMT, you must

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

deduction, over the

first reduce the passive activity loss by

Form 4835 for the AMT and the regular

property’s AMT

those amounts. The result is a passive

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

class life.

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

than the regular tax loss, or (b) the

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Instructions For Form 6251 - Alternative Minimum Tax-Individuals - 2003 Page 4

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