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must also have a present interest or an interest in the

Property Placed in Service Before 1999

residuary of the estate or trust.

IF the property is. . .

THEN use the. . .

Investment interest expense. Also enter on this line any

IRC Section 1250(c) property.

Straight-line method over

investment interest expense adjustment. If you completed

40 years.

form FTB 3526, Investment Interest Expense Deduction,

Tangible property (other than

Straight-line method over

refigure the investment interest expense using a second

the

IRC Section 1250(c) property) property’s AMT class life.

form FTB 3526. Complete that form as follows.

depreciated using straight line

for the regular tax.

Complete line 1 through line 8. Follow the form FTB 3526

instructions for line 1 through line 8, except:

Any other tangible property.

150% declining-balance

method, switching to

• When completing line 1, include any interest expense

straight line the first tax

from Schedule P (541), line 4a, that was paid or

year it gives a larger

accrued on indebtedness properly attributable to

deduction, over the

property held for investment within the meaning of IRC

property’s AMT class life.

Section 163(d)(5). An example is interest on a home

equity loan whose proceeds were invested in stocks or

Property placed in service after 1998.

bonds. This interest might be deductible as home

For property placed in service after 1998, no adjustment is

mortgage interest for regular tax, but is not deductible

necessary if the property is IRC Section 1250(c) property

for AMT; and

or tangible property (other than IRC Section 1250(c)

• When entering the 1998 disallowed investment interest

property) depreciated using the straight-line or 150%

expense on line 2, use the 1998 AMT disallowed

declining-balance method for the regular tax. For any other

investment interest expense; and

tangible property, use the 150% declining-balance method,

• When completing line 4f, refigure the gross investment

switching to straight line the first tax year it gives a larger

income, any net gain from the disposition of property

deduction, and the same convention and recovery period

held for investment, and any investment expenses, by

used for the regular tax.

taking into account all of the AMT adjustments and tax

For more information, refer to federal Form 1041,

preferences that apply.

Schedule I; federal Publication 946, How to Depreciate

The adjustment is the difference between the AMT form

Property; or IRC Section 168(g).

FTB 3526, line 8, and the regular tax form FTB 3526, line 8.

Certain grapevines: Grapevines that were replanted as a

If the amount figured for AMT is more than that figured for

result of phylloxera infestation or Pierce’s Disease and are

regular tax, enter the adjustment as a negative amount.

being depreciated over a 5-year period must be depreciated

Line 4b – Personal property taxes and real property

over a 10-year period.

taxes

Partners, LLC members, or S corporation shareholders:

Enter on this line any state and local personal property

Enter the amount shown on the Schedule K-1 (565, 568, or

taxes and state, local, or foreign real property taxes that are

100S) issued by your partnership, LLC, or S corporation

included on Form 541, line 11.

for post-1986 depreciation.

Line 4c – Miscellaneous itemized deductions from

Enter on line 4e the difference between depreciation for

Form 541, line 15b

regular tax and depreciation for AMT. To figure the AMT

adjustment on this line, subtract the depreciation figure

Miscellaneous itemized deductions subject to the 2% AGI

calculated for AMT from the depreciation allowed for

limitation are not deductible for AMT purposes.

regular tax. If the depreciation calculated for AMT is greater

Line 4d – Refund of personal property taxes and real

than the depreciation allowed for regular tax, enter the

property taxes

adjustment as a negative amount. Do not include deprecia-

Enter on this line any refunds of taxes the estate or trust

tion from:

received in 1999 if the taxes:

• An activity for which the estate or trust is not at risk;

• Are those described in line 4b above;

• Amounts received from a partnership, LLC, or

• Are attributable to a taxable year after 1986; and

S corporation if the basis limitations under IRC

• Were deducted in a taxable year after 1986.

Section 704(d) or Section 1366(d) apply;

• A passive activity; or

Line 4e – Post-1986 depreciation

• A tax shelter farm activity.

If you filed federal Schedule(s) C, E, or F and have tangible

Instead, include these depreciation adjustments when

property that you began depreciating after 1986, you must

figuring the adjustments on line 4l, line 4m, or line 4n,

use the Alternative Depreciation System (ADS) to calculate

whichever applies.

AMT depreciation as follows:

Line 4f – Circulation and research and experimental

Property placed in service before 1999.

expenditures paid or incurred after 1986

For property placed in service before 1999, refigure the

AMT depreciation using the ADS, with the same convention

If the estate or trust elected the optional 3-year write-off

used for the regular tax. See the following table for the

period for circulation expenditures or the optional 10-year

method and recovery period to use.

write-off period for research and experimental expenditures

under IRC Section 59(e), skip this line.

Circulation expenditures. For regular tax, IRC Section 173

allows a deduction for the full amount of circulation

expenditures in the taxable year paid or incurred. For AMT,

these expenditures must be amortized over 3 years

beginning with the year the expenditures were paid or

incurred. Enter on this line the difference between the AMT

deduction and the regular tax deduction. If the AMT

Schedule P (541) Instructions 1999 Page 3

Instructions For Schedule P (541) - Alternative Minimum Tax And Credit Limitations - Fiduciaries - 1999 Page 3

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