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For AMT, use the percentage-of-completion method described in

For regular tax, IRC Section 174(a) allows you to deduct your research and

IRC Section 460(b) to determine your taxable income from any

experimental expenditures in the taxable year you paid or incurred them.

long-term contract, defined in IRC Section 460(f) you entered into after

If you deducted them in the year incurred, amortize these expenditures

February 28 1986. However, this rule does not apply to: 1) any home

over 10 years for AMT. Enter the difference between your AMT deduction

construction contract, as defined in IRC Section 460(e)(6) you entered

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

into after June 20, 1988, and before 1991, if you meet the 2-year

regular tax deduction, enter your adjustment as a negative amount.

estimated completion requirement of IRC Section 460(e)(1)(B)(i) and the

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

$10-million ceiling on average annual gross receipts requirement of IRC

to circulation, research, or experimental expenditures.

Section 460(e)(1)(B)(ii), or 2) any home construction contract entered

Line 13k – Tax shelter farm activities

into after 1990.

If you include AMT adjustments or preferences on this line, do not

In the case of a contract described in IRC Section 460(e)(1), use

include them on any other line of this schedule.

the simplified procedures for allocating costs outlined in IRC

Complete this line only if you have a gain or loss from a tax shelter farm

Section 460(b)(3) to determine the percentage of completion.

activity, as defined in IRC Section 58(a)(2) that is not a passive activity. If

Enter on line 13e the difference between the income you reported for

the tax shelter farm activity is a passive activity, include it with your other

regular tax and the income you recomputed for AMT. If the income for

passive activities on line 11.

AMT is less than the income for regular tax, enter the difference as a

Refigure all gains and losses you reported for regular tax from tax shelter

negative amount.

farm activities using your AMT adjustments and preferences. Figure your

Line 13f – Loss limitations

tax shelter farm activity gain or loss for AMT using the same rules you

If you include AMT adjustments or preferences on this line, do not

used for regular tax except for the following:

include them on any other line of this schedule. Do not include any

• Do not take any refigured loss unless you are insolvent. See IRC

passive activities on this line. Instead, use line 11. Also use line 11 for

Section 58(c)(1).

passive tax shelter farm activities. Use line 13k for nonpassive tax shelter

• Do not offset gains from other tax shelter farm activities with your

farm activities.

recomputed loss.

For AMT, refigure certain limited losses using your AMT adjustments

Suspend and carryover your loss to future taxable years until one of the

and preferences. Refigure your gains and losses from activities for

following apply:

which you are not at risk. Also, refigure your basis limitations that apply

• Have a gain in a future taxable year from that same activity.

to partnerships and S corporations. Refer to IRC Sections 59(h), 465,

• Dispose of the activity.

704(d), and 1366(d).

Enter on this line the difference between the amount that was reported

Enter on this line the difference between AMT limited losses (from

for regular tax for the activity on federal Schedule E or federal Form 4835

activities reported on federal Schedules C, C-EZ, E, F, or federal

and the amount that would be reported for the activity for AMT.

Form 4835) and your regular tax limited losses from these activities.

Line 13l – Related adjustments

Line 13g – Mining costs

If you have an entry on one of the following lines:

If you elected the optional 10-year write-off under IRC Section 59(e)

for regular tax, skip this line. For AMT, you must capitalize your mining

• Line 7 (if you deducted investment interest on federal Schedule E)

exploration and development costs and amortize them over ten years

• Line 8 through line 11

beginning with the taxable year you paid or incurred the expenditures.

• Line 13a through line 13k

Enter the difference between your AMT mining amortization and your

You must refigure the following items. These items are limited based on

regular tax mining deduction. If your AMT mining amortization is more

income (other than a limit based on federal AGI or federal modified AGI)

than your regular tax mining deduction, enter your adjustment as a

using your AMT income:

negative amount.

• IRC Section 179 expense.

See IRC Section 56(a)(2)(B) for special rules that apply to losses related

• Taxable IRA distribution (if prior year IRA deductions were different for

to mining property.

AMT and regular tax).

Line 13h – Patron’s adjustment

• Expenses for business or rental use of your home.

Distributions you received from a cooperative may be includible in

• Conservation expenses.

income. Unless the distributions are nontaxable, enter on line 13h the

• Self-employed health insurance deduction.

total AMT patronage dividend and per-unit retain allocation adjustment

• Keogh retirement plan or self-employed SEP or SIMPLE deduction

reported to you by the cooperative.

• IRA deductions affected by the earned income limitation of IRC

Section 219(b)(1)(B).

Line 13i – Pollution control facilities

For regular tax, you may elect to amortize the basis of a certified pollution

Figure the difference between AMT and regular tax amount for each item.

control facility over 60 months. For facilities placed in service before

Combine the amounts for all your related adjustments and enter the total

1999, the AMT deduction is figured using the alternative depreciation

on line 13l. Keep a copy of all computations for your records, including

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

any AMT carryover and basis amounts.

Asset Depreciation Range System (ADR) under the straight-line method.

Line 15 – Taxable income

For facilities placed in service after 1998, the AMT deduction is figured

Enter on this line the amount from Form 540, line 19. If Form 540, line 19

under the modified accelerated cost recovery system (MACRS) using the

is zero, subtract Form 540, line 18 from Form 540, line 17 and enter the

straight-line method. Enter the difference between your AMT pollution

result as a negative amount.

control facilities depreciation and your regular tax pollution control

Line 17 – AMTI Exclusion

facilities amortization. If your AMT pollution control facilities depreciation

Qualified taxpayers must exclude income from any trade or business

is more than your regular tax pollution control facilities amortization,

when figuring AMTI. If you are a qualified taxpayer, refer to General

enter the adjustment as a negative amount.

Information G, Alternative Minimum Taxable Income (AMTI) Exclusion,

Line 13j – Research and experimental costs

enter your taxable trade or business income on line 17. If zero or less,

Do not make this adjustment for costs paid or incurred in connection

with an activity in which you materially participated under the passive

activity rules or for costs for which you elected the optional 10-year

write-off under IRC section 59(e) for the regular tax.

Schedule P (540) Instructions 2013 Page 5

Instructions For Schedule P (540) - Alternative Minimum Tax And Credit Limitations - Residents - 2013 Page 5

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