Maryland Form 502tp - Computation Of Tax Preference Income - 2014
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12014
COMPUTATION OF TAX
MARYLAND
FORM
PREFERENCE INCOME
502TP
ATTACH TO YOUR TAX RETURN.
Print using blue or black ink only.
Your first name and initial
Last name
Social Security Number
Spouse’s first name and initial
Last name
Social Security Number
Who must file: File this form if the total tax preference items (line 2) is more than $10,000 ($20,000 for a joint return).
1.
Tax preference items
|
a
Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a.
____________________
|
b
Depreciation (pre-1987 Rules) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b.
____________________
|
c
Intangible drilling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.
____________________
|
d
Exclusion for gains on sale of certain small business stock. . . . . . . . . . . . . . . . . . . . . . . . . . d.
____________________
|
2.
Total tax preference items (Add lines 1a through 1d.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
____________________
|
3.
Exclusion. Enter $10,000 ($20,000 for a joint return.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
____________________
|
4.
Subtract line 3 from line 2 (If less than zero (0) enter zero (0).) . . . . . . . . . . . . . . . . . . . . . . . . 4.
____________________
5.
Taxable tax preference items. Multiply line 4 by 50% (.50). Enter this amount on line 5
|
of Form 502, or line 3a of Form 504, or line 19 of Form 505. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
____________________
Instructions for Form 502TP
COMPUTATION OF TAX PREFERENCE INCOME
GENERAL INSTRUCTIONS
instructions for line 1a and/or 1b above. If you have any other tax
An addition modification is required for certain items of income that are
preference item referenced in lines 1c through 1d go to Form 6251 to
considered to be of a tax preference nature, as defined in Internal
determine the amount reportable on Form 502TP. If your total tax
Revenue Code (IRC) Section 57. The addition is computed by first totaling
preference items on line 2 of the Form 502TP are over $10,000 ($20,000
all the items of tax preference, then reducing this amount by a specific
for joint returns), you must include these items as an addition to income
exclusion of $10,000 ($20,000 for a joint return). The excess is further
regardless of whether you are subject to the Alternative Minimum Tax on
reduced by 50%.
your federal return. Taxpayers who file separate Maryland returns must
compute their addition to income on separate Forms 502TP.
WHO MUST FILE
Any individual or fiduciary of an estate or trust with items of tax preference
NONRESIDENT AND PART-YEAR RESIDENT INDIVIDUALS
in excess of $10,000 ($20,000 for a joint return) must complete Form
The items of tax preference of nonresident and part-year residents should
502TP and file with the income tax return.
include only those items properly allocated to Maryland. Generally, this
includes tax preference items derived from tangible property (real and
ITEMS OF TAX PREFERENCE
personal) permanently located in Maryland (whether the income is derived
The items of tax preference are those listed below.
directly or indirectly from a trust or estate); tax preference items
attributable to a business, trade, occupation or profession wholly carried
Line 1a Depletion:
on or carried on both in and out of Maryland and tax preference items
Calculate the excess of the deduction for depletion allowable under IRC
derived from a business wholly carried on or carried on both in and out of
Section 611 for the tax year over the adjusted basis of the property at the
Maryland of which the individual is a partner of a partnership, shareholder
end of the tax year. Subtract any oil percentage depletion deduction
of an S corporation, member of a limited liability company taxed as a
included in the figure you calculated. Enter the result on line 1a.
partnership, beneficiary of a business trust taxed as a partnership or
The Depletion tax preference item does not apply to you if you are
proprietor.
an independent producer or royalty owner claiming percentage
If all of the tax preference items reported to the IRS are allocated to
depletion for oil and gas wells.
Maryland, then the nonresident or part-year resident may claim the
Line 1b Depreciation (Pre-1987 Rules):
exclusion of $10,000 for an individual return or $20,000 for a joint return
For tax preference purposes, you must use the straight line method to
on line 3. If the tax preference items reported are based on income
figure depreciation on real property for which accelerated depreciation was
derived both in and out of Maryland (income from preference items
determined using pre-1987 rules. Use a recovery period of 19 years for
taxable to Maryland should be reported on this form (on lines 1a through
19-year real property other than recovery property, enter the amount by
1d) by using separate accounting), then the nonresident or part-year
which your regular tax depreciation using the pre-1987 rules exceeds the
resident may only claim a partial exclusion on line 3.
depreciation allowable using the straight line method. For leased 10-year
The partial exclusion is calculated by using a fraction, with the numerator
recovery property and leased 15-year public utility property, enter the
being the dollar amount of the tax preference items based on income
amount by which your regular tax depreciation exceeds the depreciation
taxable in Maryland and the denominator being the total amount of the
allowable using the straight line method with a half-year convention, no
tax preference items, multiplied by $10,000 for an individual return or
salvage value and a recovery period of 15 years (22 years for 15-year
$20,000 for a joint return. Enter the amount of this calculated partial
public utility property). You must figure the excess depreciation separately
exclusion on line 3 and continue to follow the form numbered instructions.
for each property and include on line 1b only positive amounts.
SMALL BUSINESS CORPORATIONS
Line 1c Intangible Drilling Costs:
Individual shareholders of small business corporations that have elected
Enter the amount from line 26 of federal Form 6251.
to be S corporations under change to IRC Section 1362 shall account for
Line 1d Exclusion of Gains on Sale of Certain Small Business Stock:
the corporation’s tax preference items as belonging to the individual
Enter the amount from line 13 of federal Form 6251.
shareholders. A pro rata apportionment of the items of tax preference is
reportable by each shareholder on his or her individual return consistent
The federal Form 6251 also includes adjustments to develop alternative
with the method in which net operating losses are passed through and
minimum taxable income for federal purposes. These adjustments do not
apportioned among them for federal purposes.
affect your Maryland tax preference items.
For more information, visit our Web site at or
HOW TO FILE
email your question to TAXHELP@comp.state.md.us. You may also call
Complete federal Form 6251.
1-800-638-2937 or from Central Maryland 410-260-7980.
If you have taken a deduction for depletion, or if you have taken
depreciation on your federal tax return using pre-1987 rules, follow the
COM/RAD-016
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