Refer to IRC Section 56(a)(2)(B) for special rules that apply to losses
Incentive stock options (ISOs). For regular tax, no income is recognized
related to mining property.
when an ISO, as defined in IRC Section 422(b), is granted or exercised.
However, this rule does not apply for AMT for ISOs exercised after
Line 4h – Long-term contracts entered into after February 28, 1986
December 31, 1987. Instead, the estate or trust must include the excess,
For AMT, the percentage-of-completion method of accounting described
if any, of:
in IRC Section 460(b) generally must be used. This rule does not apply
to home construction contracts, as defined in IRC Section 460(e)(6).
• The fair market value (FMV) of the option (determined without regard
to any lapse restriction) at the first time the rights in the option
To figure the AMT adjustment, subtract the amount computed using the
become transferable or when these rights are no longer subject to a
percentage-of-completion method for AMT from the amount allowed for
substantial risk of forfeiture, over
regular tax. If the amount for AMT is less than the amount computed for
• The amount the estate or trust paid for the option.
regular tax, enter the difference as a negative amount.
Increase the AMT basis of any stock acquired through the exercise of an
Line 4i – Amortization of pollution control facilities placed in service
ISO by the amount of the adjustment. Do not make an AMT adjustment
if the estate or trust exercised an ISO and disposed of that stock in the
For regular tax, the estate or trust may elect to amortize the basis of a
certified pollution control facility over 60 months.
Line 4l – Certain loss limitations
For facilities placed in service before 1999, the AMT deduction is
If you include adjustments or preferences on this line, do not include
figured using the alternative depreciation system (ADS) described in
them on any other line of this schedule. If the loss is from a passive
IRC Section 168(g). Use the federal Class Life Asset Depreciation Range
activity, use line 4n instead. If the loss is from a tax shelter farm activity
System (ADR) under the straight-line method.
(that is not passive), use line 4m.
For facilities placed in service after 1998, the AMT deduction is figured
For AMT, refigure certain limited losses using the AMT adjustments and
under the modified accelerated cost recovery system (MACRS) using the
tax preferences. Refigure the gains and losses from activities for which
the estate or trust is not at risk. Also, refigure the basis limitations that
To figure the AMT adjustment on line 4i, subtract the amount figured
apply to partnerships and S corporations. Refer to IRC Sections 59(h),
for AMT from the amount allowed for regular tax. If the AMT pollution
465, 704(d), and 1366(d).
control facilities depreciation is more than the regular tax pollution
Enter on this line the difference between AMT limited losses (from
control facilities amortization, enter the difference as a negative amount.
activities reported on federal Schedules C, C-EZ, E, F, or federal
Line 4j – Installment sales of certain property
Form 4835, Farm Rental Income and Expenses), and the regular tax
If, for regular tax purposes, the estate or trust used the installment
limited losses from these activities. If the AMT limited loss is less than
method to report any non-dealer disposition of property that occurred
the regular tax limited loss, enter the difference as a negative amount.
after August 16, 1986, but before the first day of your taxable year that
Line 4m – Tax shelter farm activities
began in 1990, and if the obligation that arose from the disposition was
If you include AMT adjustments or tax preferences on this line, do not
an installment obligation to which the proportionate disallowance rule
include them on any other line of this schedule.
applied, you must refigure your income for AMT without regard to the
Complete this line only if the estate or trust has a gain or loss from a
tax shelter farm activity, as defined in IRC Section 58(a)(2), that is not a
Enter the difference between your AMT and regular tax income on this
passive activity. If the tax shelter farm activity is a passive activity, you
line. If the AMT income is smaller, enter the difference as a negative
must include it with other passive activities on line 4n.
Refigure all gains and losses reported for regular tax from tax shelter
California conforms to the repeal of the installment method alternative
farm activities using the AMT adjustments and preferences.
minimum tax adjustment for farmers for payments received in taxable
Figure the tax shelter farm activity gain or loss for AMT using the same
years beginning on or after January 1, 1997, for installment sales made
rules used for regular tax except for the following:
in income years beginning after December 31, 1987.
• Do not take any recomputed loss unless the estate or trust is
Line 4k – Adjusted gain or loss (including incentive stock options)
insolvent, see IRC Section 58(c)(1).
The estate or trust will have an entry on this line only if it reported a
• Do not offset gains from other tax shelter farm activities with the
gain or loss from the sale or exchange of business or income-producing
property on Schedule D (541), Capital Gain and Loss, Schedule D-1,
Sales of Business Property, or federal Form 4684, Casualties and Thefts.
Suspend and carry over the loss to future taxable years until one of the
Generally, if the estate or trust reported a gain or loss from the sale or
exchange of mutual funds, stocks, or bonds, there will not be an entry
• There is a gain in a future taxable year from that same activity.
on this line.
• The activity is disposed of.
Figure the AMT adjustment for this line as follows:
Enter on this line the difference between the tax shelter farm loss for
AMT and regular tax.
Step 1 – Refigure the adjusted basis of the asset sold by taking into
account any AMT adjustments you made this year or in previous years
Line 4n – Passive activities
If you include AMT adjustments or preferences on this line, do not
for depreciation (see line 4e), incentive stock options (see line 4k),
include them on any other line of this schedule.
circulation and research and experimental expenditures (see line 4f),
pollution control facilities (see line 4i), and mining cost (see line 4g).
The estate or trust may want to complete a second form FTB 3801,
Passive Activity Loss Limitations, and the other forms or schedules on
Step 2 – Refigure your gain or loss using the adjusted basis figured in
which passive activities are reported to figure this adjustment.
Several types of adjustments may be entered on this line.
Step 3 – Figure the difference between the refigured gain or loss for
AMT and the gain or loss reported for regular tax. Enter the result on
Regular passive activities. Refigure the passive activity gains and
line 4k. Enter the difference as a negative if any of the following apply:
losses for AMT by taking into account all AMT adjustments, preferences
and AMT prior year unallowed losses that apply to the passive activity.
• The AMT gain is less than the regular tax gain.
The adjustment is the difference between the AMT passive activity
• The AMT loss is more than the regular tax loss.
income or loss (from activities reported on federal Schedules C, C-EZ, E,
• You have an AMT loss and a regular tax gain.
F, or federal Form 4835) and the regular tax passive activity income or
loss from these activities.
Page 4 Schedule P (541) Instructions 2013