Instructions For Schedule P (Form 540nr) - Alternative Minimum Tax And Credit Limitations - Nonresidents Or Part-Year Residents - 2013 Page 4
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8Line 10 – Incentive stock options and California qualified stock options
Line 13b – Depletion
For AMT, if the depletion deduction for mines, wells, and other natural
Incentive stock options (ISOs). For regular tax, no income is recognized
deposits determined under IRC Section 611 exceeds the adjusted basis
when an IS0, as defined in IRC Section 422(b), is granted or exercised.
of the property at the end of your taxable year, you have a depletion
However, this rule does not apply for AMT. Instead, you must generally
preference adjustment.
include on line 10 the excess of:
California conformed in 1993 to the federal repeal of the AMT depletion
• The fair market value (FMV) of the stock acquired through the
adjustment for independent oil and gas producers and royalty owners.
exercise of the option (determined without regard to any lapse
See federal Form 6251 and instructions. However, your California
restriction) when your rights in the stock first become transferable,
depletion costs may continue to be different from the federal amounts
or when these rights are no longer subject to a substantial risk of
because of prior differences in law and different bases.
forfeiture, over
• The amount you paid for the stock.
To figure your adjusted basis, use the rules in IRC Section 1016, but
do not reduce the adjusted basis by current-year depletion. Figure the
Increase your AMT basis of any stock acquired through the exercise of
excess amount separately for each property. Enter on this line only the
an ISO by the amount of the AMT adjustment. If you acquired stock by
depletion amount that exceeds your adjusted basis.
exercising an ISO and you disposed of that stock in the same year, the
tax treatment under regular tax and AMT is the same (no adjustment is
Line 13c – Installment sales
required).
If, for regular tax purposes, you used the installment method to report a
non-dealer disposition of property that occurred after August 16, 1986,
California qualified stock options (CQSOs). Under R&TC
but before January 1, 1990, and if the obligation that arose from the
Section 17502, taxpayers whose earned income from the corporation
disposition was an installment obligation to which the proportionate
granting the CQSO was $40,000 or less may exclude compensation
disallowance rule applied, you must refigure your income for AMT
arising from the exercise of a CQSO from regular tax income. The
purposes without regard to the installment method.
amount of compensation excluded for regular tax must be included for
AMT on this line.
Enter the difference between your AMT and regular tax income on this
line. If the AMT income is smaller, enter the difference as a negative
Line 11 – Passive activities adjustment
amount.
You may want to complete a second form FTB 3801, Passive Activity
Loss Limitations, and the other forms or schedules on which your
Line 13d – Intangible drilling costs (IDCs)
passive activities are reported to figure this adjustment. You may enter
If you elected the optional 60-month write-off under IRC Section 59(e)
the following types of adjustments on this line:
for regular tax for all property in this category, skip this line.
• Regular passive activities. Refigure your passive activity gains
IDCs from oil, gas, and geothermal wells are preferences to the
and losses for AMT by taking into account all AMT adjustments and
extent that the excess IDCs exceed 65% of the net income from the
preferences and AMT prior year unallowed losses that apply to the
wells. Figure the preference for oil and gas properties separate from
passive activity. The adjustment is the difference between your AMT
geothermal properties. To figure excess IDCs:
passive activity income or loss (from activities reported on federal
A. Figure the amount of your IDCs allowed for regular tax under IRC
Schedules C, C-EZ, E, F, or federal Form 4835, Farm Rental Income
Section 263(c). Do not include any deduction for nonproductive
and Expenses) and income or loss from these activities for regular
wells. Then refigure your IDCs allowed for AMT by amortizing them
tax.
over 120 months, starting with the month you placed the well in
• Publicly traded partnership (PTP). If you had losses from a PTP,
production. Then subtract your AMT IDCs from your regular tax IDCs
you will have to refigure the losses using any AMT adjustments,
to get your excess IDCs. You may elect to use any other method that
preferences, and any AMT prior year unallowed losses.
is allowed in determining cost depletion.
• Tax Shelter Farm Activities That Are Passive Activities. Refigure
B. Figure net income by reducing the gross income from all oil, gas,
any gain or loss from a tax shelter farm activity that is a passive
and geothermal wells that you received or accrued during the taxable
activity by taking into account all AMT adjustments, tax preference
year by any deductions allocable to these properties (reduced by the
items, and AMT prior year unallowed losses. If the amount is a gain,
excess IDCs). Use only income and deductions allowed for AMT.
it may be included on form FTB 3801 and it may be used to offset
C. Multiply the net income by 65% (.65). Subtract the result from the
AMT losses from other passive activities. But, if it is a loss, it must
excess IDCs figured in A. This is your excess IDCs that you must
be suspended and carried forward indefinitely until the corporation
enter on this line.
has a gain in a subsequent year from that same activity or it disposes
Exception: The preference for IDCs from oil and gas wells does not
of the activity. The AMT loss carryover is the refigured AMT loss.
apply to taxpayers who are independent producers, i.e., not integrated
• Insolvency. If, at the end of the taxable year, your liabilities exceed
oil companies as defined in IRC Section 291(b)(4). However, this
the FMV of your assets, increase your passive activity loss allowed
benefit may be limited. First, figure the IDC preference as if this
by that excess but not by more than your total loss. See IRC
exception did not apply. Then, for purposes of this exception, complete
Section 58(c)(1).
Schedule P (540NR) through line 19, including the IDC preference. If
Line 13 – Other adjustments and preferences
the amount of the IDC preference exceeds 40% of the amount figured
Enter the amount of any other adjustments or preferences that apply to
for line 19, enter the excess on line 13d (the benefit of this exception is
you on line 13a through line 13l. Enter the total on line 13.
limited). If the amount of the IDC preference is equal to or less than 40%
of the amount figured for line 19, do not enter an amount on line 13d
Line 13a – Circulation expenditures
(the benefit of this exception is not limited).
If you elected the optional three year write-off period for circulation
expenditures under IRC Section 59(e), skip this line.
Line 13e – Long-term contracts
For regular tax, IRC Section 173 allows you to deduct the full amount
For regular tax, you may have figured taxable income from a long-term
of circulation expenditures in the taxable year you paid or incurred
contract (entered into after February 28, 1986) using the completed-
them. For AMT, you must amortize these expenditures over three years
contract method or another method.
beginning with the year you paid or incurred the expenditures. Enter the
For AMT, use the percentage-of-completion method described in IRC
difference between your AMT deduction and your regular tax deduction.
Section 460(b) to determine your taxable income from any long-
If your AMT deduction is more than your regular tax deduction, enter
term contract defined in IRC Section 460(f), you entered into after
your adjustment as a negative amount.
February 28, 1986. However, this rule does not apply to: 1) Any home
See IRC section 56(b)(2) for a special rule that applies to losses related
construction contract as defined in IRC Section 460(e)(6), you entered
to circulation expenditures.
into after June 20, 1988, and before 1991, if you meet the two year
estimated completion requirement of IRC Section 460(e)(1)(B)(i) and
the $10-million ceiling on average annual gross receipts requirement
of IRC Section 460(e)(1)(B)(ii), or 2) Any home construction contract
entered into after 1990.
Page 4 Schedule P (540NR) Instructions 2013
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