This form is used to implement a set of rules that attempt to assure that all taxpayers pay at least a minimum amount of tax. These rules have the effect of reducing tax breaks that are granted by other sections of the tax code.
The tax breaks that are reduced include: standard deduction or certain itemized deductions, personal exemptions, certain depreciation, the allowable passive activity loss, gains and losses, tax shelter farm losses, and others.
The form has you make certain adjustments to your taxable income (lines 1 through 27). In most cases, the adjustments are additions to your taxable income. Then, a tax is computed on the resulting income (lines 00 through 33). This tax is compared with your "regular" tax (see line 34 ). In effect, you pay whichever of the two tax amounts is greater.
We enter the amount from Form 1040, line 41, on line 1 if you itemize your deductions. Otherwise, we enter the amount from Form 1040, line 38.
This adjustment is for medical and dental expense allowed, up to 2.5% of AGI.
We carry this from Schedule A, line {@SchedA POMin80Pct3Pct}, but only if you itemized your deductions.
Taxes that you paid are an adjustment for AMT purposes. Tax refunds that you report in income, on the other hand, are a sort of "negative adjustment," in that they offset the adjustment for taxes paid, and they reduce your adjustments overall. That is why we carry tax refunds to line 7 as a negative number.
But tax refunds on account of pre-1987 taxes you paid don't have this effect. That is why we provide a Mini-Worksheet that backs out the amount of 2010 refunds (usually none) attributable to pre-1987 taxes.
To figure your investment interest expense adjustment, fill out a second Form 4952, using investment income and expenses as adjusted for the Alternative Minimum Tax. We calculate the adjustment as Form 4952 Copy 1 line 8 minus Form 4952 Copy 2 line 8.
This is calculated as the sum of ...
From the Partnership/S Corp K-1 Worksheets, line 16c, at the entry for "Depletion (other than oil and gas);" plus,
From the Partnership/S Corp K-1 Worksheets, line 17, at the entry for "Excess depletion, oil & gas;" plus,
From the Estate/Trust K-1 Worksheet, line , at the entry for "Depletion."
Here's how we calculate the adjustment for accelerated depreciation for tangible property placed in service after 1986:
Depreciation and Vehicle Worksheets.
We look through all the worksheets that have both Form and Copy specified.
We then check whether the destination form for the depreciation amount is a passive activity. The destination forms are: Schedule C, Schedule C-EZ, Schedule E, Schedule F, Form 2106, Form 2106-EZ, Schedule A, and Form 4835. Schedule C-EZ is treated as never being passive.
If the activity is not passive, and not a tax shelter farm loss, we then check to see whether this asset falls in the category of tangible property placed in service after 1986. This is always the case for vehicles. For other assets, we look at the category calculated in the AMT adjustment section of the Depreciation Worksheet.
If the activity carries to a tax form, is not passive, and does fall in this category, we add the AMT to our running total of AMT adjustments for this line.
We don't carry the AMT adjustment from a worksheet if it's designated for Schedule A, Form 2106 or Form 2106-EZ.
We don't carry the AMT adjustment from a worksheet if bonus depreciation is being taken for the asset.
K-1 Partnership/S Corp Worksheet.
We next look at the K-1 worksheets for partnerships and S corporations. If you have not entered a number in the box that indicates that this K-1 is a passive activity, we add the amounts from line 16a .
K-1 Estate and Trust Worksheet.
We next look at the K-1 worksheets for estates and trusts. We add the amounts from line 12 for this category.
Form 8829.
We next look at Form 8829.
If you indicated that the copy of Form 8829 carries to Schedule C (as opposed to Form 2106) we check whether the specific copy of Schedule C is passive.
If the given copy of Form 8829 carries to a copy of Schedule C which is not passive, and if there is an "X" indicating that this is property placed in service after 1986 and subject to the AMT adjustment, then we add the amount of AMT adjustment from the Depreciation Mini-Worksheet (line 40r).
We don't carry any AMT adjustment from copies of Form 8829 that carry to Form 2106 or Form 2106-EZ.
Note: We assume that the at-risk rules did not limit these deductions, and that the deductions were not limited by your basis. If either of these limitations applied, then you should override this entry to back out the AMT adjustment attributable to those activities. Then enter the AMT adjustment from those activities on line 20.
The mini-worksheet for gain or loss adjustment uses any entries you made on the mini-worksheets that appear at the bottom of Forms 4684 and 4797, on a Schedule K-1 from a partnership or S corporation, or on the Capital Gain and Loss Worksheets.
We apply any capital gain or loss adjustments and AMT capital loss carryover adjustment to your regular net capital gain or loss to compute your AMT net capital gain or loss. If the result is an overall AMT capital loss, we limit it to $3,000 ($1,500 if married filing a separate return). Then we compare the AMT net capital gain or loss to your regular capital gain or loss, and combine the difference with any other AMT gain or loss adjustments in your return. The total is your gain or loss adjustment for line 17 .
To calculate this item, we look to the AMT calculation of passive activity worksheets that we have placed at the bottom of these forms: Schedule C, Schedule F, Form 4835, Rentals and Royalties Worksheet, Worksheet for Schedule K-1 (Partnerships/S Corps) and Worksheet for Schedule K-1 (Estate and Trust).
On each copy of each form that is indicated as a passive activity, we carry to this line the difference between the regular and alternative minimum tax passive activity calculation.
Except that we're looking for a different "X" box, we calculate the preference for accelerated depreciation of real property placed in service before 1987 identically to the way we calculate accelerated depreciation for property placed in service after 1986 (see above).
We calculate the preference for accelerated depreciation for leased personal property placed in service before 1987 identically to the way we calculate accelerated depreciation for property placed in service after 1986 (see above). Well, almost identically. Here are the differences:
No 8829. We don't check Form 8829.
Different X boxes. We look at the X boxes that relate to leased personal property placed in service before 1987, not accelerated depreciation for tangible property placed in service after 1986.
As required by the tax law, we compute the preference item separately for oil & gas properties and for geothermal properties.
Here's what we do for oil and gas:
Your adjustments for passive K-1's are figured as part of your AMT adjustments on the K-1's, which are carried to the line here for adjustments for passive activities. With respect to your nonpassive K-1's, keep in mind these steps:
Figure gross income and deductions for all of your oil and gas partnerships and S Corporations. To do this, we total the gross income from line 17 in the entry for "Gross income, oil and gas" across all your K-1's. We do the same thing for deductions, from line 17, in the entry for "Deductions, oil and gas."
Find Net Income across all K-1's. To do this, we subtract the Excess IDC's from the deductions, and subtract the result from the gross income.
Total the Excess IDC's. For this, we look across all the K-1's again, line 17, in the field for "Excess IDC's."
Figure the preference. The preference is calculated as:
Excess IDC's minus (0.65 * Net Income).
We then do the same for geothermal.
The amount on this line is the total preference for oil & gas plus the preference for geothermal.
Ordinarily, this is simply the sum of lines 1 through 11.
If you're married filing separately and line 28 would be more than $191,000, however, line 28 is increased by the smaller of $29,000 or 25% of the excess over $191,000.
For most people, this line is filled in based on the simple chart on the form.
If your alternative minimum taxable income is over the limits stated on the form, or if the form is for a child under age 18, the calculation is more difficult and is spelled out in the mini-worksheet over line 29 .
If you need the mini-worksheet because your income is over the threshold for your filing status, the basic idea is that your exemption amount is phased out as your income increases.
We calculate this amount by adding together the child's wage income (from Form 1040, line 7a) and any self-employment income (Form 1040, line 12 and Schedule SE, lines A1a and A2), reduced by half of the self-employment tax, if any.
Normally, line 35 is just line 33 minus line 34, and the text to the left of line 35 is blank.