Form Ftb 6839 - Frequently Asked Questions About The Alternative Minimum Taxable Income (Amti) Exclusion

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Frequently Asked Questions about the
Alternative Minimum Taxable Income (AMTI) –
Exclusion
The Franchise Tax Board has received a considerable number of questions on the newly enacted
provision (see R&TC 17062 (b) (4)) that allows qualified taxpayers to exclude income, positive and
negative adjustments and preference items when figuring alternative minimum taxable income (AMTI).
The following information addresses most of the questions that were asked.
1.
What is the new law?
2.
What is included in gross receipts?
3.
What amounts are excluded from AMTI?
4.
How do I exclude adjustments and preferences related to trade or business income?
Q1. What is the new law?
A1. Beginning January 1, 1996, a qualified taxpayer shall exclude income, positive and negative
adjustments and preference items attributable to any trade or business when figuring AMTI. A qualified
taxpayer is an individual, estate or trust who:
Owns, or has an ownership interest in, a trade or business;
Has gross receipts, less returns and allowances, during the taxable year of less than $1,000,000
from all trade or businesses for which the taxpayer is the owner or has an ownership interest
(“aggregate gross receipts”). Gross receipts may include but are not limited to items reported on
federal Schedules C, D, E or F and from Form 4797 (or California Schedule D-1 if you were
required to complete it) figured in accordance with California law that are associated with your
trade or business. In the case of an ownership interest, the taxpayer should include only the
proportional share of gross receipts of any trade or business from a partnership, S corporation,
regulated investment company (RIC), a real estate investment trust (REIT) or a real estate
mortgage investment conduit (REMIC).
Q2. What is included in gross receipts?
A2. (The following are examples, not a comprehensive listing. Figure all items in accordance with
California law. Also, apply the $1,000,000 test to the return, regardless of marital status; the threshold
does not become $2,000,000 for married filing joint taxpayers.)
Schedule C: Combine gross receipts (or sales) and other income and reduce the total by returns
and allowances.
Schedule E: Include gross rents and gross royalties. Consider these amounts as trade or
business income for purposes of determining aggregate gross receipts.
Schedule F: Include gross income.
Schedule D, D-1 and Form 4797: Include gross sale price of business assets.
Schedule K-1: The partnership, S corporation or trust should provide the proportional share of
aggregate gross receipts on the partner’s, shareholder’s or beneficiary’s Schedule K-1 under
“other items.”
Nonresidents: Apply the gross receipts test to “income from all sources.” Do not apply again for
“income from California sources.”
FTB 6839 (NEW 3-97)
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