Instructions For Schedule P (Form 540nr) - Alternative Minimum Tax And Credit Limitations - Nonresidents Or Part-Year Residents - 2013 Page 3
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8Line 3 – Personal property taxes and real property taxes
Property placed in service before 1999
Enter on this line any of the following from federal Schedule A (1040),
IF the property is . . .
THEN use the . . .
line 6, line 7, and line 8:
IRC Section 1250(c) property
Straight-line method over
• State and local personal property taxes
40 years
• State, local, or foreign real property taxes
Tangible property (other than
Straight-line method over the
Line 4 – Certain interest on a home mortgage
IRC Section 1250(c) property)
property’s AMT class life
Enter home mortgage interest in which the proceeds were used for
depreciated using straight line
purposes other than buying, building, or improving your principal
for the regular tax
residence or a qualified dwelling that is your second home. (see
Any other tangible property
150% declining balance method,
IRC Section 163(h)(3)). This may be all or part of the amount on federal
switching to straight-line the first
Schedule A (1040), line 10, line 11, or line 12.
tax year gives a larger deduction
Example 1: John paid $950 interest on a $12,000 home equity loan used
over the property’s AMT class life
to buy a ski boat. He would enter $950 on line 4 because the proceeds
Property placed in service after 1998
were not used to buy, build, or improve his home.
For property placed in service after 1998, no adjustment is necessary if the
Example 2: Jackie paid $1,200 interest on a $15,000 home equity loan to
property is IRC Section 1250(c) property or tangible property (other than
install a swimming pool at her home. She would not make any entry on
IRC Section 1250(c) property) depreciated using the straight-line method
line 4 because the proceeds of the loan were used to improve her home.
or 150% declining balance method for the regular tax. For any other
tangible property, use the 150% declining balance method, switching to
Exception: Do not include interest on a mortgage you took out before
the straight-line method the first tax year gives a larger deduction, and the
July 1, 1982, if it was secured by property that was your main home or
same convention and recovery period used for the regular tax.
a qualified dwelling used by you or a member of your family at the time
you took out the mortgage.
Refer to federal Publication 946, How to Depreciate Property, or
IRC Section 168(g), for more information on the ADS method.
Line 5 – Miscellaneous itemized deductions
Grapevines replanted as a result of phylloxera infestation or Pierce’s
Enter the amount from federal Schedule A (1040), line 27 or federal
Disease that are depreciated over 5 years for regular tax, must be
Schedule A (1040NR), line 15 adjusted for differences between
depreciated over 10 years for AMT.
California and federal law.
Partners, S corporation shareholders, and LLC members: Enter the
Line 6 – Refund of personal property taxes and real property taxes
amount shown on the Schedule K-1 (565, 100S, or 568) issued by your
Enter on this line any refund of taxes you received if all of the following
partnership, S corporation, or LLC.
apply:
Enter on line 8 the difference between depreciation for regular tax and
• The taxes are those described in line 3.
depreciation for AMT. Do not include depreciation from the following:
• The taxes are attributable to a taxable year after 1986.
• You deducted the taxes in a taxable year after 1986.
• Expenses you incurred as an employee and deducted on federal
Schedule A (1040 or 1040NR).
Line 7 – Investment interest expense adjustment
• An activity for which you are not at risk.
Enter on this line any investment interest expense adjustment. If you
• Amounts received from a partnership or S corporation if the basis
completed form FTB 3526, Investment Interest Expense Deduction,
limitations under IRC Section 704(c) or IRC Section 1366(d) apply.
refigure your investment interest expense using a second form
• A passive activity.
FTB 3526. Complete line 1 through line 8. Follow form FTB 3526
• A tax shelter farm activity.
instructions for line 1 through line 8 except for the following:
Instead, include these types of depreciation when you figure adjustments
• When completing line 1, include any interest expense from
for line 5, line 11, line 13f, line 13i, or line 13k, whichever applies.
Schedule P (540NR), Part I, line 4, that was paid or accrued on
indebtedness attributable to property held for investment within the
If the AMT depreciation is more than the regular tax depreciation, enter
meaning of IRC Section 163(d)(5). An example is interest on a home
the difference on line 8 as a negative amount.
equity loan from which the proceeds were invested in stocks or
Line 9 – Adjusted gain or loss
bonds. This interest might be deductible as home mortgage interest
You will have an entry on this line only if you reported a gain or loss
for regular tax, but not for AMT.
on California Schedule D (540NR), California Capital Gain or Loss
• When entering your 2012 disallowed investment interest expense on
Adjustment, Schedule D-1, federal Schedule D, federal Form 4797, or
line 2, use your 2012 AMT disallowed investment interest expense.
federal Form 4684, Casualties and Theft, for income producing property
• When completing line 4 a-c, refigure your gross investment income,
that has a different basis for AMT than for regular tax. Generally, if you
any net gain from the disposition of property held for investment,
reported a gain or loss from the sale or exchange of mutual funds,
and any investment expenses by taking into account all of your AMT
stocks, or bonds, you will not have an entry on this line.
adjustments and preferences that apply.
To figure the amount to enter on this line:
Your adjustment is the difference between your AMT form FTB 3526,
Step 1 – Refigure the adjusted basis of the asset sold. Take into account
line 8, and your regular tax form FTB 3526, line 8. If the amount figured
any AMT adjustments you made this year or in previous years for
for AMT is more than the amount figured for regular tax, enter the
depreciation, incentive stock options, circulation expenditures, pollution
adjustment as a negative amount.
control facilities, research and experimental expenditures, and mining
If you did not itemize deductions and had investment interest expense,
costs.
do not enter an adjustment. However, if you reported investment
Step 2 – Refigure your gain or loss using the adjusted basis from Step 1.
interest expense on federal Schedule E, follow the instructions above for
completing form FTB 3526.
Step 3 – Figure the difference between the AMT gain or loss and
the regular tax gain or loss and enter the result on line 9. Enter the
Line 8 – Post-1986 depreciation
difference as a negative amount if: the AMT gain is less than the regular
If you filed federal Schedules C, E, or F and have tangible property
tax gain; the AMT loss is more than the regular tax loss; or you have an
which you began depreciating after 1986, you must use the Alternative
AMT loss and a regular tax gain.
Depreciation System (ADS) to calculate AMT depreciation as follows:
Property placed in service before 1999
For property placed in service before 1999, refigure the AMT depreciation
using the ADS, with the same convention used for the regular tax. See the
table on this page for the method and recovery period to use.
Schedule P (540NR) Instructions 2013 Page 3
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