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deduction is more than the regular tax deduction, enter the

obligation that arose from the disposition was an install-

difference as a negative amount.

ment obligation to which the proportionate disallowance

rule applied, you must refigure your income for AMT

Research and experimental expenditures. For regular tax,

without regard to the installment method.

IRC Section 174(a) allows a deduction for research and

experimental expenditures in the taxable year paid or

Enter the difference between your AMT and regular tax

incurred. For AMT, these expenditures must be amortized

income on this line. If the AMT income is smaller, enter the

over a 10-year period. To figure the AMT adjustment,

difference as a negative amount.

subtract the amortization figured for AMT from the

Note: California conforms to the repeal of the installment

amortization allowed for regular tax. If the AMT amortiza-

method alternative minimum tax adjustment for farmers for

tion is greater than regular tax amortization, enter the

payments received in income years beginning on or after

adjustment as a negative amount. Otherwise, enter the

January 1, 1997, for installment sales made in income

difference as a positive amount.

years beginning after December 31, 1987.

Refer to IRC Section 56(b)(2)(B) for special rules that

Line 4k – Adjusted gain or loss (including incentive

apply to losses related to circulation or research property.

stock options)

Line 4g – Mining exploration and development costs

The estate or trust will have an entry on this line only if it

paid or incurred after 1986

reported a gain or loss from the sale or exchange of

If the estate or trust elected the optional 10-year write-off

business or income-producing property on Schedule D

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

(541), Capital Gain and Loss, Schedule D-1, Sales of

Business Property, or federal Form 4684, Casualties and

For regular tax, IRC Sections 616(a) and 617(a) allow a

Thefts. Note: Generally, if the estate or trust reported a gain

deduction for mining exploration and development costs in

or loss from the sale or exchange of mutual funds, stocks,

the taxable year you paid or incurred them. For AMT, these

or bonds, there will not be an entry on this line.

costs must be capitalized and amortized over 10 years

beginning with the taxable year the expenditures were paid

Figure the AMT adjustment for this line as follows:

or incurred. Enter the difference between the AMT mining

Step 1 – Refigure the adjusted basis of the asset sold by

amortization and the regular tax mining deduction. If the

taking into account any AMT adjustments you made this

AMT mining amortization is more than the regular tax

year or in previous years for depreciation (see line 4e,

mining deduction, enter the adjustment as a negative

line 4r, and line 4s), incentive stock options (see line 4k),

amount.

circulation and research and experimental expenditures

Refer to IRC Section 56(a)(2)(B) for special rules that apply

(see line 4f), pollution control facilities (see line 4i), and

to losses related to mining property.

mining cost (see line 4g).

Step 2 – Refigure your gain or loss using the adjusted

Line 4h – Long-term contracts entered into after

basis figured in Step 1.

February 28, 1986

Step 3 – Figure the difference between the refigured gain

For AMT, the percentage-of-completion method of

or loss for AMT and the gain or loss reported for regular

accounting described in IRC Section 460(b) generally must

tax. Enter the result on line 4k. Enter the difference as a

be used. This rule does not apply to home construction

negative amount if:

contracts (as defined in IRC Section 460(e)(6)).

• The AMT gain is less than the regular tax gain;

To figure the AMT adjustment, subtract the amount

• The AMT loss is more than the regular tax loss; or

computed using the percentage-of-completion method for

• You have an AMT loss and a regular tax gain.

AMT from the amount allowed for regular tax. If the

amount for AMT is less than the amount computed for

Incentive stock options (ISOs). For regular tax, no income

regular tax, enter the difference as a negative amount.

is recognized when an ISO (as defined in IRC Section

422(b)) is granted or exercised. However, this rule does not

Line 4i – Amortization of pollution control facilities

apply for AMT for ISOs exercised after December 31, 1987.

placed in service after 1986

Instead, the estate or trust must include the excess, if any,

For regular tax, the estate or trust may elect to amortize the

of:

basis of a certified pollution control facility over 60

• The fair market value of the option (determined without

months.

regard to any lapse restriction) at the first time the

For facilities placed in service before 1999, the AMT

rights in the option become transferable or when these

deduction is figured using the alternative depreciation

rights are no longer subject to a substantial risk of

system (ADS) described in IRC Section 168(g). Use the

forfeiture, over

federal Class Life Asset Depreciation Range System (ADR)

• The amount the estate or trust paid for the option.

under the straight-line method.

Increase the AMT basis of any stock acquired through the

For facilities placed in service after 1998, the AMT

exercise of an ISO by the amount of the adjustment. Do not

deduction is figured under the modified accelerated cost

make an AMT adjustment if the estate or trust exercised an

recovery system (MACRS) using the straight-line method.

ISO and disposed of that stock in the same year.

To figure the AMT adjustment on line 4i, subtract the

Line 4l – Certain loss limitations

amount figured for AMT from the amount allowed for

Important: If you include adjustments or preferences on

regular tax. If the AMT pollution control facilities deprecia-

this line, do not include them on any other line of this

tion is more than the regular tax pollution control facilities

schedule. If the loss is from a passive activity, use line 4n

amortization, enter the difference as a negative amount.

instead. If the loss is from a tax shelter farm activity (that is

Line 4j – Installment sales of certain property

not passive), use line 4m.

If, for regular tax purposes, the estate or trust used the

For AMT, refigure certain limited losses using the AMT

installment method to report any nondealer disposition of

adjustments and tax preferences. Refigure the gains and

property that occurred after August 16, 1986, but before

losses from activities for which the estate or trust is not at

the first day of your tax year that began in 1990, and if the

Page 4 Schedule P (541) Instructions 1999

Instructions For Schedule P (541) - Alternative Minimum Tax And Credit Limitations - Fiduciaries - 1999 Page 4

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