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secures the debt and is utilized by a beneficiary of the estate or trust as

Property placed in service after 1998. For property placed in

his or her primary residence or second home. The beneficiary must also

service after 1998, no adjustment is necessary if the property is

have a present interest or an interest in the residuary of the estate or trust.

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

Section 1250(c) property; depreciated using the straight-line or 150%

Investment interest expense. Also enter on this line any investment

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

interest expense adjustment. If you completed form FTB 3526,

property, use the 150% declining balance method, switching to

Investment Interest Expense Deduction, refigure the investment interest

straight-line the first taxable year it gives a larger deduction, and the

expense using a second form FTB 3526.

same convention and recovery period used for the regular tax.

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

For more information, get federal Schedule I (Form 1041); federal

for line 1 through line 8, except for the following:

Publication 946, How to Depreciate Property; or see IRC Section 168(g).

• When completing line 1, include any interest expense from

Certain grapevines. Grapevines that were replanted as a result of

Schedule P (541), line 4a, that was paid or accrued on indebtedness

phylloxera infestation or Pierce’s Disease that are depreciated over

properly attributable to property held for investment within the

5 years for regular tax, must be depreciated over 10 years for AMT.

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

equity loan whose proceeds were invested in stocks or bonds. This

Partners, LLC members, or S corporation shareholders. Enter the

interest might be deductible as home mortgage interest for regular

amount shown on the Schedule K-1 (565, 568, or 100S, Share of

tax, but is not deductible for AMT.

Income, Deductions, Credits, etc.,) issued by your partnership, LLC, or

• When entering the 2012 disallowed investment interest expense on

S corporation for post-1986 depreciation.

line 2, use the 2012 AMT disallowed investment interest expense.

Enter on line 4e the difference between depreciation for regular tax and

• When completing line 4f, refigure the gross investment income,

depreciation for AMT. To figure the AMT adjustment on this line, subtract

any net gain from the disposition of property held for investment,

the depreciation figure calculated for AMT from the depreciation allowed

and any investment expenses, by taking into account all of the AMT

for regular tax. If the depreciation calculated for AMT is greater than the

adjustments and tax preferences that apply.

depreciation allowed for regular tax, enter the adjustment as a negative

The adjustment is the difference between the AMT form FTB 3526,

amount. Do not include depreciation from the following:

line 8, and the regular tax form FTB 3526, line 8. If the amount figured

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

for AMT is more than that figured for regular tax, enter the adjustment

• Amounts received from a partnership, LLC, or S corporation if the

as a negative amount.

basis limitations under IRC Section 704(d) or Section 1366(d) apply

Line 4b – Personal property taxes and real property taxes

• A passive activity

Enter on this line any state and local personal property taxes and state,

• A tax shelter farm activity

local, or foreign real property taxes that are included on Form 541,

Instead, include these depreciation adjustments when figuring the

line 11.

adjustments on line 4l, line 4m, or line 4n, whichever applies.

Line 4c – Miscellaneous itemized deductions from Form 541, line 15b

Line 4f – Circulation and research and experimental expenditures

Miscellaneous itemized deductions subject to the 2% AGI limitation are

paid or incurred after 1986

not deductible for AMT purposes.

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

Line 4d – Refund of personal property taxes and real property taxes

circulation expenditures and/or the optional 10-year write-off period for

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

research and experimental expenditures under IRC Section 59(e), skip

2013 if all the following apply:

this line.

• Are those described in line 4b above

Circulation expenditures. For regular tax, IRC Section 173 allows a

deduction for the full amount of circulation expenditures in the taxable

• Are attributable to a taxable year after 1986

• Were deducted in a taxable year after 1986

year paid or incurred. For AMT, these expenditures must be amortized

over three years beginning with the year the expenditures were paid or

Line 4e – Depreciation of property placed in service after 1986

incurred. Enter on this line the difference between the AMT deduction

If you filed federal Schedule C, C-EZ, Net Profit from Business, E or F

and the regular tax deduction. If the AMT deduction is more than the

and have tangible property that you began depreciating after 1986, you

regular tax deduction, enter the difference as a negative amount.

must use the Alternative Depreciation System (ADS) to calculate AMT

depreciation as follows:

Research and experimental expenditures. For regular tax, IRC

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

Property placed in service before 1999. For property placed in service

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

before 1999, refigure the AMT depreciation using the ADS, with the

expenditures must be amortized over a 10-year period. To figure the

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

AMT adjustment, subtract the amortization figured for AMT from the

method and recovery period to use.

amortization allowed for regular tax. If the AMT amortization is greater

Property placed in service before 1999

than regular tax amortization, enter the adjustment as a negative

amount. Otherwise, enter the difference as a positive amount.

IF the property is. . .

THEN use the. . .

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

IRC Section 1250(c) property

Straight-line method over

related to circulation, research, or experimental expenditures.

40 years.

Line 4g – Mining exploration and development costs paid or incurred

Tangible property (other than

Straight-line method over

after 1986

the IRC Section 1250(c) property)

property’s AMT class life.

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

depreciated using straight-line

Section 59(e), skip this line.

for the regular tax

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

Any other tangible property

150% declining balance

mining exploration and development costs in the taxable year paid or

method, switching to

incurred. For AMT, these costs must be capitalized and amortized over

straight-line the first

10 years beginning with the taxable year the expenditures were paid

tax year it gives a larger

or incurred. Enter the difference between the AMT mining amortization

deduction, over the

and the regular tax mining deduction. If the AMT mining amortization is

property’s AMT class life.

more than the regular tax mining deduction, enter the adjustment as a

negative amount.

Schedule P (541) Instructions 2013 Page 3

Instructions For Schedule P (Form 541) - Alternative Minimum Tax And Credit Limitations - Fiduciaries - 2013 Page 3

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