Free 2008 Instruction 6251 - Federal

2008
Instructions for Form 6251
Alternative Minimum Tax--Individuals
Section references are to the Internal Revenue Code unless otherwise noted.

Department of the Treasury Internal Revenue Service

General Instructions
What's New
The following changes to the alternative minimum tax (AMT) apply for 2008. 1. The exemption amount has increased to $46,200 ($69,950 if married filing jointly or qualifying widow(er); $34,975 if married filing separately). 2. The exemption amount is now limited for certain children under age 24. (Before 2008, the limit applied to children under age 18.) The minimum exemption amount for a child has increased to $6,400. 3. The interest on certain qualified mortgage bonds, qualified veterans' mortgage bonds, and bonds related to residential rental projects is not a tax preference item if the bonds were issued after July 30, 2008. Do not include it on line 12. For details, see section 57(a)(5)(C)(iii). 4. No AMT adjustment is required for depreciation of qualified disaster assistance property that is eligible for the special depreciation allowance. See the instructions for line 18 that begin on page 4. 5. The 90% limit on the alternative tax net operating loss deduction (ATNOLD) does not apply to the portion of an ATNOLD attributable to qualified disaster losses. See the instructions for line 28 on page 8. 6. If you claimed the standard deduction for the regular tax and it includes a net disaster loss attributable to a federally declared disaster, that net disaster loss is also allowable as a deduction for the AMT. See the instructions for line 7 on page 3. 7. The following benefits apply in the Kansas disaster area. (For a complete discussion of the temporary tax relief available, see Publication 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes.) a. No AMT adjustment is required for depreciation of qualified recovery assistance property that is eligible for the special depreciation allowance. See the instructions for line 18 that begin on page 4. b. The 90% limit on the alternative tax net operating loss deduction (ATNOLD) does not apply to the portion

of an ATNOLD attributable to qualified recovery assistance losses. See the instructions for line 28 on page 8. 8. The following benefits apply in the Midwestern disaster areas. (For a complete discussion of the temporary tax relief available, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.) a. The exemption amount on Form 8914 that is allowable for the regular tax if you provided housing for a person displaced by the Midwestern severe storms, tornadoes, and flooding is also allowable for the AMT. b. The interest on qualified Midwestern disaster area bonds is not a tax preference item. Do not include it on line 12. See page 3. c. The 90% limit on the alternative tax net operating loss deduction (ATNOLD) does not apply to the portion of an ATNOLD attributable to qualified disaster recovery assistance losses. See the instructions for line 28 on page 8.

would be greater than line 35 if you did not take into account lines 9 through 28.

Recordkeeping
For the AMT, certain items of income, deductions, etc., receive different tax treatment than for the regular tax. Therefore, you need to refigure items for the AMT that you figured for the regular tax. In some cases, you may wish to do this by completing the applicable tax form a second time. If you do complete another form, do not attach it to your tax return, but keep it for your records. However, you may have to attach an AMT Form 1116, Foreign Tax Credit, to your return; see the instructions for line 33 that begin on page 9. For the regular tax, some deductions and credits may result in carrybacks or carryforwards to other tax years. Examples are investment interest expense, a net operating loss, a capital loss, a passive activity loss, and the foreign tax credit. Because you may have to refigure these items for the AMT, the carryback or carryforward amount may be different for the AMT than for the regular tax. Your at-risk limits and basis amounts also may differ for the AMT. Therefore, you must keep records of these different amounts.

Purpose of Form
Use Form 6251 to figure the amount, if any, of your alternative minimum tax (AMT). The AMT applies to taxpayers who have certain types of income that receive favorable treatment, or who qualify for certain deductions, under the tax law. These tax benefits can significantly reduce the regular tax of some taxpayers with higher economic incomes. The AMT sets a limit on the amount these benefits can be used to reduce total tax. Also use Form 6251 to figure the tax liability limit on the credits listed under Who Must File next.

Partners and Shareholders
If you are a partner in a partnership or a shareholder in an S corporation, see Schedule K-1 and its instructions to figure your adjustments or preferences from the partnership or S corporation to include on Form 6251.

Who Must File
Attach Form 6251 to your return if any of the following statements is true. 1. Form 6251, line 32, is greater than line 35. 2. You claim any general business credit on Form 3800, Part I; the empowerment zone and renewal community employment credit; the qualified electric vehicle credit; the alternative motor vehicle credit; the alternative fuel vehicle refueling property credit; or the credit for prior year minimum tax. 3. The total of Form 6251, lines 9 through 28, is negative and line 32
Cat. No. 64277P

Nonresident Aliens
If you are a nonresident alien and you disposed of U.S. real property interests at a gain, you must make a special computation. Fill in Form 6251 through line 31. If your net gain from the disposition of U.S. real property interests and the amount on line 29 are both greater than the tentative amount you figured for line 31, replace the amount on line 31 with the smaller of that net gain or the amount on line 29. Also, enter "RPI" on the dotted line next to line 31. Otherwise, do not change line 31.

Home Mortgage Interest Adjustment Worksheet--Line 4

Keep for Your Records

taken into account in figuring the amount to enter for any other adjustment or preference.

Line 1
If Form 1040, line 43, includes a write-in amount (such as a capital construction fund deduction for commercial fishermen), adjust line 1 by the write-in amount. Form 1040NR. If you are filing Form 1040NR, enter the amount from Form 1040NR, line 38. If less than zero, enter as a negative amount.

1. Enter the total of the home mortgage interest you deducted on lines 10 through 12 of Schedule A (Form 1040) and any qualified mortgage insurance premiums you deducted on line 13 of Schedule A (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter the part, if any, of the interest included on line 1 above that was paid on an eligible mortgage (defined on this page). Include any qualified mortgage insurance premiums included on line 1 above that were paid in connection with an eligible mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Enter the part, if any, of the interest included on line 1 above that was paid on a mortgage whose proceeds were used in a refinancing (including a second or later refinancing) of an eligible mortgage. Include any qualified mortgage insurance premiums included on line 1 above that were paid in connection with such a mortgage. Do not include any interest paid on (or any qualified mortgage insurance premiums paid in connection with) the part of the balance of the new mortgage that exceeded the balance of the original eligible mortgage immediately before it was refinanced (or, if smaller, the balance of any prior refinanced mortgage immediately before that mortgage was refinanced) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Enter the part, if any, of the interest included on line 1 above that was paid on a mortgage: · Taken out before July 1, 1982, and · Secured, at the time the mortgage was taken out, by your main home or a qualified dwelling used by you or your family (see definitions on this page). Do not include any amount entered on line 2 or line 3 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Add lines 2 through 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Subtract line 5 from line 1 and enter the result on Form 6251, line 4 . . 6.

Line 3--Taxes
Enter the amount of all taxes from Schedule A (Form 1040), line 9, except generation-skipping transfer taxes on income distributions. Be sure to include any state and local general sales taxes included on Schedule A, line 9. Form 1040NR. If you are filing Form 1040NR, enter the amount of all taxes from Schedule A (Form 1040NR), line 3, except generation-skipping transfer taxes on income distributions.

Line 4--Home Mortgage Interest Adjustment
Complete the worksheet on this page to figure your home mortgage interest adjustment. The definitions of certain terms used in the worksheet are as follows. Eligible mortgage. An eligible mortgage is a mortgage whose proceeds were used to buy, build, or substantially improve your main home or a second home that is a qualified dwelling. A mortgage whose proceeds were used to refinance another mortgage is not an eligible mortgage. Qualified dwelling. A qualified dwelling is any house, apartment, condominium, or mobile home not used on a transient basis. Family. Family includes only your brothers and sisters (whether by whole or half blood), your spouse, your ancestors, and your lineal descendants. Example. In 2008, Dave and Jennifer paid $10,000 in interest on a mortgage they took out to buy their home (an eligible mortgage). In May 2008, they refinanced that mortgage and paid $9,000 in interest through the rest of the year. The balance of the new mortgage is the same as the balance of the old mortgage. In July 2008, they obtained a home equity loan on their home and used the proceeds to buy a new car. They paid $5,000 in interest on the home equity loan in 2008. They enter the following amounts on the Home Mortgage Interest Adjustment Worksheet: $24,000 on line 1 ($10,000 plus $9,000 plus $5,000), $10,000 on line 2, $9,000 on line 3, $ -0- on line 4, $19,000 on line 5 ($10,000 plus $9,000), and $5,000 on line 6 ($24,000 minus $19,000).

Credit for Prior Year Minimum Tax
See Form 8801, Credit for Prior Year Minimum Tax -- Individuals, Estates, and Trusts, if you paid AMT for 2007 or you had a minimum tax credit carryforward on your 2007 Form 8801. If you pay AMT for 2008, you may be able to take a credit on Form 8801 for 2009.

For information on making the election, see section 59(e) and Regulations section 1.59-1. Also see Pub. 535.

Specific Instructions
If you owe AMT, you may be TIP able to lower your total tax (regular tax plus AMT) by claiming itemized deductions on Form 1040, even if your total itemized deductions are less than the standard deduction. This is because the standard deduction (except the part due to a net disaster loss) is not allowed for the AMT and, if you claim the standard deduction on Form 1040, you cannot claim itemized deductions for the AMT.

Optional Write-Off for Certain Expenditures
There is no AMT adjustment for the following items if you elect for the regular tax to deduct them ratably over the period of time shown. · Circulation expenditures -- 3 years (section 173). · Research and experimental expenditures -- 10 years (section 174(a)). · Mining exploration and development costs -- 10 years (sections 616(a) and 617(a)). · Intangible drilling costs -- 60 months (section 263(c)).

Part I--Alternative Minimum Taxable Income (AMTI)
To avoid duplication, any adjustment or preference for line CAUTION 5, 19, or 20 or for a tax shelter farm activity on line 27 must not be

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Line 5--Miscellaneous Deductions
If you are filing Form 1040NR, enter the amount from Schedule A (Form 1040NR), line 15.

Line 6
Enter the amount from line 11 of the Itemized Deductions Worksheet as a negative amount. Form 1040NR. If you are filing Form 1040NR and line 36 is over $159,950 (over $79,975 if you checked filing status box 3, 4, or 5), enter the amount from line 11 of the Itemized Deductions Worksheet in the instructions for Form 1040NR as a negative amount on line 6.

Line 7
If you are claiming the standard deduction and it includes a net disaster loss attributable to a federally declared disaster, enter the amount from Form 4684, line 18a, as a negative amount. If you are filing Schedule A (Form 1040), do not enter an amount on line 7; the amount of your disaster loss deduction, if any, is already included in the amount you entered on line 1.

Step 2. Enter your AMT disallowed investment interest expense from 2007 on line 2. Complete line 3. Step 3. When completing Part II, refigure the following amounts, taking into account all adjustments and preferences. · Gross income from property held for investment. · Net gain from the disposition of property held for investment. · Net capital gain from the disposition of property held for investment. · Investment expenses. Include any interest income and investment expenses from private activity bonds issued after August 7, 1986. On line 4g, enter the smaller of: 1. The amount from line 4g of your regular tax Form 4952, or 2. The total of lines 4b and 4e of this AMT Form 4952. Step 4. Complete Part III. Enter on Form 6251, line 9, the difference between line 8 of your AMT Form 4952 and line 8 of your regular tax Form 4952. If your AMT expense is greater, enter the difference as a negative amount. Investment interest expense that is not an itemized deduction. If you did not itemize deductions and you had investment interest expense, do not enter an amount on Form 6251, line 9, unless you reported investment interest expense on Schedule E. If you did, follow the steps above for completing Form 4952. Allocate the investment interest expense allowed on line 8 of the AMT Form 4952 in the same way you did for the regular tax. Enter on Form 6251, line 9, the difference between the amount allowed on Schedule E for the regular tax and the amount allowed on Schedule E for the AMT.

Enter the difference between the regular tax and AMT deduction. If the AMT deduction is greater, enter the difference as a negative amount.

Line 11--Net Operating Loss Deduction
If you are filing Form 1040NR, enter your net operating loss deduction from Form 1040NR, line 21, as a positive amount.

Line 12--Interest From Private Activity Bonds
Enter on line 12 interest you earned on "specified private activity bonds" reduced (but not below zero) by any deduction that would have been allowable if the interest were includible in gross income for the regular tax. Each payer of this type of interest should send you a Form 1099-INT showing the amount of this interest in box 9. Generally, the term "specified private activity bond" means any private activity bond (as defined in section 141) issued after August 7, 1986. See section 57(a)(5) for exceptions and more details. Do not include interest on qualified Gulf Opportunity Zone bonds described in section 1400N(a) or qualified Midwestern disaster area bonds. Exempt-interest dividends paid by a regulated investment company are treated as interest income on specified private activity bonds to the extent the dividends are attributable to interest on the bonds received by the company, minus an allocable share of the expenses paid or incurred by the company in earning the interest. This amount should also be reported to you on Form 1099-INT in box 9. If you are filing Form 8814, Parents' Election To Report Child's Interest and Dividends, any tax-exempt interest income from line 1b of that form that is a preference item must be included on this line.

Line 8--Refund of Taxes
Include any refund from Form 1040, line 10 (or Form 1040NR, line 11), that is attributable to state or local income taxes. Also include any refunds received in 2008 and included in income on Form 1040, line 21, that are attributable to state or local personal property taxes or general sales taxes, foreign income taxes, or state, local, or foreign real property taxes. Enter the total as a negative amount. If you include an amount from Form 1040, line 21, you must enter a description and the amount next to the entry space for line 8. For example, if you include a refund of real property taxes, enter "real property" and the amount next to the entry space.

Line 9--Investment Interest
If you filled out Form 4952, Investment Interest Expense Deduction, for your regular tax, you will need to fill out a second Form 4952 for the AMT as follows. Step 1. Follow the Form 4952 instructions for line 1, but also include the following amounts when completing line 1. · Any interest expense on Form 6251, line 4, that was paid or accrued on indebtedness attributable to property held for investment within the meaning of section 163(d)(5) (for example, interest on a home equity loan whose proceeds were invested in stocks or bonds). · Any interest that would have been deductible if interest earned on private activity bonds issued after August 7, 1986, had been includible in gross income.

Line 10--Depletion
You must refigure your depletion deduction for the AMT. To do so, use only income and deductions allowed for the AMT when refiguring the limit based on taxable income from the property under section 613(a) and the limit based on taxable income, with certain adjustments, under section 613A(d)(1). Also, your depletion deduction for mines, wells, and other natural deposits under section 611 is limited to the property's adjusted basis at the end of the year, as refigured for the AMT, unless you are an independent producer or royalty owner claiming percentage depletion for oil and gas wells under section 613A(c). Figure this limit separately for each property. When refiguring the property's adjusted basis, take into account any AMT adjustments you made this year or in previous years that affect basis (other than current year depletion).

Line 13--Qualified Small Business Stock
If you claimed the exclusion under section 1202 for gain on qualified small business stock held more than 5 years, multiply the excluded gain (as shown on Schedule D (Form 1040)) by 7% (.07). Enter the result on line 13 as a positive amount.

Line 14--Exercise of Incentive Stock Options
For the regular tax, no income is recognized when an incentive stock option (ISO), as defined in section 422(b), is exercised. However, this rule does not apply for the AMT. Instead, you generally must include on line 14 the excess, if any, of: 1. The fair market value of the stock acquired through exercise of the option (determined without regard to any lapse

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restriction) when your rights in the acquired stock first become transferable or when these rights are no longer subject to a substantial risk of forfeiture, over 2. The amount you paid for the stock, including any amount you paid for the ISO used to acquire the stock. Note. Even if your rights in the stock are not transferable and are subject to a substantial risk of forfeiture, you may elect to include in AMT income the excess of the stock's fair market value (determined without regard to any lapse restriction) over the exercise price upon the transfer to you of the stock acquired through exercise of the option. You must make the election by the 30th day after the date of the transfer. See Pub. 525, Taxable and Nontaxable Income, for more details. If you acquired stock by exercising an ISO and you disposed of that stock in the same year, the tax treatment under the regular tax and the AMT is the same, and no adjustment is required. Increase your AMT basis in any stock acquired through the exercise of an ISO by the amount of the adjustment. Keep adequate records for both the AMT and regular tax so that you can figure your adjustment. See the instructions for line 17.

Schedule D for the AMT, if applicable, by taking into account any adjustments you made this year or in previous years that affect your basis or otherwise result in a different amount for the AMT. If you have a capital loss after refiguring Schedule D for the AMT, apply the $3,000 capital loss limitation separately to the AMT loss. Because the amount of your gains and losses may be different for the AMT, the amount of any capital loss carryover also may be different for the AMT. See the example that begins below. To figure your AMT capital loss carryover, fill out an AMT Capital Loss Carryover Worksheet in the Schedule D instructions. For each of the four items listed earlier, figure the difference between the amount included in taxable income for the regular tax and the amount included in income for the AMT. Treat the difference as a negative amount if (a) both the AMT and regular tax amounts are zero or more and the AMT amount is less than the regular tax amount or (b) the AMT amount is a loss, and the regular tax amount is a smaller loss or zero or more. Enter on line 17 the combined adjustments for the four items listed earlier. Example. On March 13, 2007, Victor Ash, whose filing status is single, paid $20,000 to exercise an incentive stock option (which was granted to him on January 3, 2006) to buy 200 shares of stock worth $200,000. The $180,000 difference between his cost and the value of the stock at the time he exercised the option is not taxable for the regular tax. His regular tax basis in the stock at the end of 2007 is $20,000. For the AMT, however, Ash must include the $180,000 as an adjustment on his 2007 Form 6251. His AMT basis in the stock at the end of 2007 is $200,000. On January 18, 2008, Ash sold 100 of the shares for $75,000. Because Ash did not hold these shares more than 1 year, that sale is a disqualifying disposition. For the regular tax, Ash has ordinary income of $65,000 (proceeds minus his $10,000 basis in the 100 shares). Ash has no capital gain or loss for the regular tax resulting from the sale. For the AMT, Ash has no ordinary income, but has a short-term capital loss of $25,000 (proceeds minus his $100,000 AMT basis in the 100 shares). On April 21, 2008, Ash sold the other 100 shares for $60,000. Because he held the shares for more than 1 year, the sale is not a disqualifying disposition. For the regular tax, Ash has a long-term capital gain of $50,000 (proceeds minus his regular tax basis of $10,000). For the AMT, Ash has a long-term capital loss of $40,000

Line 16--Large Partnerships
If you were a partner in an electing large partnership, enter the amount from Schedule K-1 (Form 1065-B), box 6. Take into account any amount from box 5 on Form 6251, line 19.

(proceeds minus his AMT basis of $100,000). Ash has no other sales of stock or other capital assets for 2008. Ash enters a total negative adjustment of $118,000 on line 17 of his 2008 Form 6251, figured as follows: · Ash figures a negative adjustment of $65,000 for the difference between the $65,000 of regular tax ordinary income and the $0 of AMT ordinary income for the first sale. · For the regular tax, Ash has $50,000 capital gain net income reported on Schedule D for the second sale. For the AMT, Ash has a $25,000 short-term capital loss from the first sale, and a $40,000 long-term capital loss from the second sale, resulting in a net capital loss of $65,000 for the AMT. However, only $3,000 of the $65,000 net capital loss is allowed for 2008 for the AMT. The difference between the regular tax Schedule D gain of $50,000 and the $3,000 loss allowed for the AMT results in a $53,000 negative adjustment to include on line 17. Ash has an AMT capital loss carryover from 2008 to 2009 of $62,000, of which $22,000 is short-term and $40,000 is long-term. If he has no other Schedule D transactions for 2009, his adjustment reported on line 17 of his 2009 Form 6251 would be limited to ($3,000), the amount of his capital loss limitation for 2009.

Line 18--Post-1986 Depreciation
This section describes when depreciation must be refigured for the AMT and how to figure the amount to enter on line 18. Do not use line 18 for depreciation related to the following. · Employee business expenses claimed on line 21 of Schedule A (Form 1040) or line 9 of Schedule A (Form 1040NR). Take this adjustment into account on line 5. · Passive activities. Take this adjustment into account on line 19. · An activity for which you are not at risk or income or loss from a partnership or an S corporation if the basis limitations apply. Take this adjustment into account on line 20. · A tax shelter farm activity. Take this adjustment into account on line 27.

Line 17--Disposition of Property
Your AMT gain or loss from the disposition of property may be different from your gain or loss for the regular tax. This is because the property may have a different adjusted basis for the AMT. Use this line to report any AMT adjustment resulting from refiguring: 1. Gain or loss from the sale, exchange, or involuntary conversion of property reported on Form 4797, Sales of Business Property; 2. Casualty gain or loss to business or income-producing property reported on Form 4684, Casualties and Thefts; 3. Ordinary income from the disposition of property not already taken into account in (1) or (2) or on any other line on Form 6251, such as a disqualifying disposition of stock acquired in a prior year by exercising an incentive stock option; and 4. Capital gain or loss (including any carryover that is different for the AMT) reported on Schedule D (Form 1040), Capital Gains and Losses. First figure any ordinary income adjustment related to (3) above. Then, refigure Form 4684, Form 4797, and

What Depreciation Must Be Refigured for the AMT?
Generally, you must refigure depreciation for the AMT, including depreciation allocable to inventory costs, for: · Property placed in service after 1998 that is depreciated for the regular tax using the 200% declining balance method (generally 3-, 5-, 7-, and 10-year property under the modified accelerated cost recovery system (MACRS), except for qualified property eligible for the special depreciation

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allowance (discussed later on this page)); · Section 1250 property placed in service after 1998 that is not depreciated for the regular tax using the straight line method; and · Tangible property placed in service after 1986 and before 1999. (If the transitional election was made under section 203(a)(1)(B) of the Tax Reform Act of 1986, this rule applies to property placed in service after July 31, 1986.)

method not expressed in a term of years. · Qualified Indian reservation property. · Qualified revitalization expenditures for a building for which you elected to claim the commercial revitalization deduction under section 1400I. · A natural gas gathering line placed in service after April 11, 2005.

How Is Depreciation Refigured for the AMT?
Property placed in service before 1999. Refigure depreciation for the AMT using ADS, with the same convention used for the regular tax. See the following table for the method and recovery period to use.
Property Placed in Service Before 1999 IF the property is... THEN use the... section 1250 property straight line method over 40 years.

tax deduction, enter the difference as a negative amount. In addition to the AMT adjustment to your deduction for depreciation, you must also adjust the amount of depreciation that was capitalized, if any, to account for the difference between the rules for the regular tax and the AMT. Include on this line the current year adjustment to taxable income, if any, resulting from the difference.

What Depreciation Is Not Refigured for the AMT?
Do not refigure depreciation for the AMT for the following. · Residential rental property placed in service after 1998. · Nonresidential real property with a class life of 27.5 years or more placed in service after 1998 that is depreciated for the regular tax using the straight line method. · Other section 1250 property placed in service after 1998 that is depreciated for the regular tax using the straight line method. · Property (other than section 1250 property) placed in service after 1998 that is depreciated for the regular tax using the 150% declining balance method or the straight line method. · Property for which you elected to use the alternative depreciation system (ADS) of section 168(g) for the regular tax. · Qualified property that is or was eligible for a special depreciation allowance if the depreciable basis of the property for the AMT is the same as for the regular tax. This applies to any special depreciation allowance, including those for qualified disaster assistance property, qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified New York Liberty Zone property, qualified Gulf Opportunity Zone property, and Kansas disaster area qualified recovery assistance property. The special allowance is deductible for the AMT, and there also is no adjustment required for any depreciation figured on the remaining basis of the qualified property if the depreciable basis of the property for the AMT is the same as for the regular tax. Property for which an election is in effect to not have the special allowance apply is not qualified property. · Any part of the cost of any property for which you made the election under section 179 to treat the cost of the property as a deductible expense. The reduction to the depreciable basis of section 179 property by the amount of the section 179 expense deduction is the same for the regular tax and the AMT. · Motion picture films, videotapes, or sound recordings. · Property depreciated under the unit-of-production method or any other

Line 19--Passive Activities
Your passive activity gains and losses must be refigured for the AMT by taking into account all adjustments and preferences and any AMT prior year unallowed losses that apply to that activity. You may fill out a second Form 8582, Passive Activity Loss Limitations, and the other forms or schedules on which your passive activities are reported, to determine your passive activity loss allowed for the AMT, but do not file the second set of forms and schedules with your tax return. Example. You are a partner in a partnership and the Schedule K-1 (Form 1065) you received shows the following. · A passive activity loss of $4,125, · A depreciation adjustment of $500 on post-1986 property, and · An adjustment of $225 on the disposition of property. Because the two adjustments above are not allowed for the AMT, you must first reduce the passive activity loss by those amounts. The result is a passive activity loss for the AMT of $3,400. You then enter this amount on the AMT Form 8582 and refigure the allowable passive activity loss for the AMT. The amount of any AMT passive TIP activity loss that is not deductible and is carried forward is likely to differ from the regular tax amount, if any. Therefore, keep adequate records for both the AMT and regular tax. Enter the difference between the amount that would be reported for the activity on Schedule C, C-EZ, E, or F or Form 4835, Farm Rental Income and Expenses, for the AMT and the regular tax amount. If (a) the AMT loss is more than the regular tax loss, (b) the AMT gain is less than the regular tax gain, or (c) you have an AMT loss and a regular tax gain, enter the adjustment as a negative amount. Enter any adjustment for amounts reported on Schedule D, Form 4684, or Form 4797 for the activity on line 17 instead of line 19. See the instructions for line 17 on page 4.

tangible property straight line method (other than section over the property's 1250 property) AMT class life. depreciated using straight line method for the regular tax any other tangible property 150% declining balance method, switching to straight line method the first tax year it gives a larger deduction, over the property's AMT class life.

Property placed in service after 1998. Use the same convention and recovery period used for the regular tax. For property other than section 1250 property, use the 150% declining balance method, switching to straight line the first tax year it gives a larger deduction. For section 1250 property, use the straight line method.

How Is the AMT Class Life Determined?
The class life used for the AMT is not necessarily the same as the recovery period used for the regular tax. The class lives for the AMT are listed in Rev. Proc. 87-56, 1987-2 C.B. 674, and in Pub. 946, How To Depreciate Property. Use 12 years for any tangible personal property not assigned a class life. See Pub. 946 for tables that TIP may be used to figure AMT depreciation. Rev. Proc. 89-15, 1989-1 C.B. 816, has special rules for short years and for property disposed of before the end of the recovery period.

How Is the Adjustment Figured?
Subtract the AMT deduction for depreciation from the regular tax deduction and enter the result. If the AMT deduction is more than the regular

Publicly Traded Partnership (PTP)
If you had a loss from a PTP, refigure the loss using any AMT adjustments and preferences and any AMT prior year unallowed loss.

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Tax Shelter Passive Farm Activities
Refigure any gain or loss from a tax shelter passive farm activity taking into account all AMT adjustments and preferences and any AMT prior year unallowed losses. If the amount is a gain, include it on the AMT Form 8582. If the amount is a loss, do not include it on the AMT Form 8582. Carry the loss forward to 2009 to see if you have a gain or loss from tax shelter passive farm activities for 2009.

regular tax and AMT deduction. If the AMT deduction is greater, enter the difference as a negative amount. If you had a loss on property for which circulation costs have not been fully amortized for the AMT, your AMT deduction is the smaller of (a) the amount of the loss allowable for the costs had they remained capitalized or (b) the remaining costs to be amortized for the AMT.

Line 24--Research and Experimental Costs
Do not make this adjustment for costs paid or incurred in CAUTION 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 for the regular tax. Research and experimental costs deducted in full for the regular tax in the tax year they were paid or incurred must be capitalized and amortized over 10 years for the AMT. Enter the difference between the regular tax and AMT deduction. If the AMT deduction is greater, enter the difference as a negative amount. If you had a loss on property for which research and experimental costs have not been fully amortized for the AMT, your AMT deduction is the smaller of (a) the loss allowable for the costs had they remained capitalized or (b) the remaining costs to be amortized for the AMT.

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Insolvency
If at the end of the tax year your liabilities exceed the fair market value of your assets, increase your passive activity loss allowed by that excess (but not by more than your total loss). See section 58(c)(1).

Line 22--Long-Term Contracts
For the AMT, you generally must use the percentage-of-completion method described in section 460(b) to determine your income from any long-term contract (defined in section 460(f)). However, this rule does not apply to any home construction contract (as defined in section 460(e)(6)). For contracts excepted from the percentage-of-completion method for the regular tax by section 460(e)(1), you must use the simplified procedures for allocating costs outlined in section 460(b)(3) to determine the percentage of completion. Enter the difference between the AMT and regular tax income. If the AMT income is smaller, enter the difference as a negative amount. Note. If you are required to use the percentage-of-completion method for either the regular tax or the AMT, you may owe or be entitled to a refund of interest for the tax year the contract is completed or adjusted. For details, see Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts.

Line 20--Loss Limitations
For passive activities, see the line 19 instructions instead. For tax shelter farm activities (that are not passive), see the line 27 instructions that begin on page 7. Refigure your gains and losses from activities for which you are not at risk and basis limitations applicable to partnerships and S corporations by taking into account all AMT adjustments and preferences that apply. See sections 59(h), 465, 704(d), and 1366(d). Enter the difference between the amount that would be reported for the activity on Schedule C, C-EZ, E, or F or Form 4835 for the AMT and the regular tax amount. If (a) the AMT loss is more than the regular tax loss, (b) the AMT gain is less than the regular tax gain, or (c) you have an AMT loss and a regular tax gain, enter the adjustment as a negative amount. The AMT amount of any gain or loss from activities for which you are not at risk is likely to differ from the regular tax amount. Your AMT basis in partnerships and S corporations is also likely to differ from your regular tax basis. Therefore, keep adequate records for both the AMT and regular tax. Enter any adjustment for amounts reported on Schedule D, Form 4684, or Form 4797 for the activity on line 17 instead of line 20.

Line 25--Installment Sales
The installment method does not apply for the AMT to any nondealer disposition of property after August 16, 1986, but before January 1, 1987, if an installment obligation to which the proportionate disallowance rule applied arose from the disposition. Enter the amount of installment sale income reported for the regular tax as a negative amount on line 25.

Line 26--Intangible Drilling Costs (IDCs)
Do not make this adjustment for costs for which you elected the CAUTION optional 60-month write-off for the regular tax. IDCs from oil, gas, and geothermal wells are a preference to the extent that the excess IDCs exceed 65% of the net income from the wells. Figure the preference for all oil and gas properties separately from the preference for all geothermal properties. Excess IDCs. Figure excess IDCs as follows. Step 1. Determine the amount of your IDCs allowed for the regular tax under section 263(c), but do not include any section 263(c) deduction for nonproductive wells. Step 2. Subtract the amount that would have been allowed had you amortized these IDCs over a 120-month period starting with the month the well was placed in production. If you prefer not to use the 120-month period, you can elect to use any method that is permissible in determining cost depletion. Net income. Determine net income by reducing the gross income that you received or accrued during the tax year

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Line 23--Mining Costs
Do not make this adjustment for costs for which you elected the CAUTION optional 10-year write-off for the regular tax.

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Line 21--Circulation Costs
Do not make this adjustment for costs for which you elected the CAUTION optional 3-year write-off for the regular tax. Circulation costs (expenditures to establish, maintain, or increase the circulation of a newspaper, magazine, or other periodical) deducted in full for the regular tax in the year they were paid or incurred must be capitalized and amortized over 3 years for the AMT. Enter the difference between the

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Mining exploration and development costs deducted in full for the regular tax in the tax year they were paid or incurred must be capitalized and amortized over 10 years for the AMT. Enter the difference between the regular tax and AMT deduction. If the AMT deduction is greater, enter the difference as a negative amount. If you had a loss on property for which mining costs have not been fully amortized for the AMT, your AMT deduction is the smaller of (a) the loss allowable for the costs had they remained capitalized or (b) the remaining costs to be amortized for the AMT.

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from all oil, gas, and geothermal wells by the deductions allocable to those wells (reduced by the excess IDCs). When refiguring net income, use only income and deductions allowed for the AMT. Exception. The preference for IDCs from oil and gas wells does not apply to taxpayers who are independent producers (that is, not integrated oil companies as defined in section 291(b)(4)). However, this benefit may be limited. First, figure the IDC preference as if this exception did not apply. Then, for purposes of this exception, complete Form 6251 through line 27, including the IDC preference, and combine lines 1 through 27. If the amount of the IDC preference exceeds 40% of the total of lines 1 through 27, enter the excess on line 26 (your benefit from this exception is limited). Otherwise, do not enter an amount on line 26 (your benefit from this exception is not limited).

Pollution Control Facilities
The section 169 election to amortize the basis of a certified pollution control facility over a 60-month or 84-month period is not available for the AMT. For facilities placed in service before 1999, figure the AMT deduction using ADS. For facilities placed in service after 1998, figure the AMT deduction under MACRS using the straight line method. Enter the difference between the regular tax and AMT deduction. If the AMT amount is greater, enter the difference as a negative amount.

Related Adjustments
If you have an entry on line 9 because you deducted investment interest allocable to an interest in a trade or business, or on line 10, 13, 14, or 16 through 26, or you have any amount included on line 27 from pre-1987 depreciation, patron's adjustment, pollution control facilities, or tax shelter farm activities, you may have to refigure any item of income or deduction based on a limit of income other than AGI or modified AGI. Affected items include the following. · Section 179 expense deduction (Form 4562, line 12). · Expenses for business or rental use of your home. · Conservation expenses (Schedule F, line 14). · Taxable IRA distributions (Form 1040, line 15b, or Form 1040NR, line 16b), if prior year IRA deductions were different for the AMT and the regular tax. · Self-employed health insurance deduction (Form 1040, line 29, or Form 1040NR, line 28). · Self-employed SEP, SIMPLE, and qualified plans deduction (Form 1040, line 28, or Form 1040NR, line 27). · IRA deduction (Form 1040, line 32, or Form 1040NR, line 31), affected by the earned income limitation of section 219(b)(1)(B). Figure the difference between the AMT and regular tax amount for each item. Combine the amounts for all your related adjustments and include the total on line 27. Keep a copy of all computations for your records, including any AMT carryover and basis amounts. Do not include on line 27 any adjustment for an item you CAUTION refigured on another line of this form (for example, line 10). Example. On your Schedule C (Form 1040) you have a net profit of $9,000 before figuring your section 179 deduction. You do not report any other business income on your return. During the year, you purchased an asset for $10,000 for which you elect to take the section 179 deduction. You also have an AMT depreciation adjustment of $700 for other assets depreciated on your Schedule C. Your section 179 deduction for the regular tax is limited to your net profit (before any section 179 deduction) of $9,000. The $1,000 excess is a section 179 deduction carryforward for the regular tax. For the AMT, your net profit is $9,700, and you are allowed a section 179 deduction of $9,700 for the AMT. You have a section 179 deduction carryforward of $300 for the AMT. You include a $700 negative adjustment on line 27 because your section 179 deduction for the AMT is

Tax Shelter Farm Activities
Figure this adjustment only if you have a gain or loss from a tax shelter farm activity (as defined in section 58(a)(2)) that is not a passive activity. If the activity is passive, you must include it with your other passive activities on line 19. Refigure all gains and losses you reported for the regular tax from tax shelter farm activities by taking into account any AMT adjustments and preferences. Determine your tax shelter farm activity gain or loss for the AMT using the same rules you used for the regular tax with the following modifications. No refigured loss is allowed, except to the extent you are insolvent (see section 58(c)(1)). A refigured loss may not be used in the current tax year to offset gains from other tax shelter farm activities. Instead, any refigured loss must be suspended and carried forward indefinitely until (a) you have a gain in a subsequent tax year from that same activity or (b) you dispose of the activity. Enter the difference between the amount that would be reported for the activity on Schedule E or F or Form 4835 for the AMT and the regular tax amount. If (a) the AMT loss is more than the regular tax loss, (b) the AMT gain is less than the regular tax gain, or (c) you have an AMT loss and a regular tax gain, enter the adjustment as a negative amount. Enter any adjustment for amounts reported on Schedule D, Form 4684, or Form 4797 for the activity on line 17 instead of line 27.

Line 27--Other Adjustments
Enter on line 27 the total of any other adjustments that apply to you, including the following.

Depreciation Figured Using Pre-1987 Rules
This preference generally only applies to property placed in service after 1987, but depreciated using pre-1987 rules due to transitional provisions of the Tax Reform Act of 1986. For the AMT, you must use the straight line method to figure depreciation on real property for which accelerated depreciation was determined using pre-1987 rules. Use a recovery period of 19 years for 19-year real property and 15 years for low-income housing. For leased personal property other than recovery property, enter the amount by which your regular tax depreciation using the pre-1987 rules exceeds the depreciation allowable using the straight line method. For leased 10-year recovery property and leased 15-year public utility property, enter the amount by which your regular tax depreciation exceeds the depreciation allowable using the straight line method with a half-year convention, no salvage value, and a recovery period of 15 years (22 years for 15-year public utility property). Figure the excess of the regular tax depreciation over the AMT depreciation separately for each property and include on line 27 only positive amounts.

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Charitable Contributions of Certain Property
If you made a charitable contribution of property to which section 170(e) applies and you had a different basis for AMT purposes, you may have to make an adjustment. See section 170(e) for details.

Patron's Adjustment
Distributions you received from a cooperative may be includible in income. Unless the distributions are nontaxable, include on line 27 the total AMT patronage dividend adjustment reported to you by the cooperative, such as on Form 1099-PATR.

Alcohol, Biodiesel, and Renewable Diesel Fuels Credits
If your taxable income includes an amount from the alcohol fuel credit or the biodiesel and renewable diesel fuels credit under section 87, include that amount as a negative amount on line 27.

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$700 greater than your allowable regular tax deduction. In the following year, when you use the $1,000 regular tax carryforward, you will have a $700 positive related adjustment for the AMT because your AMT carryforward is only $300.

Line 28--Alternative Tax Net Operating Loss Deduction (ATNOLD)
The ATNOLD is the sum of the alternative tax net operating loss (ATNOL) carryovers and carrybacks to the tax year, subject to the limitation explained later on this page. Figure your ATNOLD as follows. Your ATNOL for a loss year is the excess of the deductions allowed for figuring AMTI (excluding the ATNOLD) over the income included in AMTI. Figure this excess with the modifications in section 172(d), taking into account your AMT adjustments and preferences (that is, the section 172(d) modifications must be separately figured for the ATNOL). For example, the limitation of nonbusiness deductions to the amount of nonbusiness income must be separately figured for the ATNOL, using only nonbusiness income and deductions that are included in AMTI. Your ATNOLD may be limited. To figure the ATNOLD limitation, you must first figure your AMTI without regard to the ATNOLD and any domestic production activities deduction. To do this, first figure a tentative amount for line 10 by treating line 28 as if it were zero. Next, figure a tentative total of lines 1 through 27 using the tentative

line 10 amount and treating line 28 as if it were zero. Add any domestic production activities deduction to this tentative total. Your ATNOLD is limited to 90% of the result. However, if an ATNOL that is carried back or carried forward to the tax year is attributable to qualified disaster losses (as defined in section 172(j)), qualified Gulf Opportunity Zone losses (as defined in section 1400N(k)(2)), qualified recovery assistance losses (as defined in Pub. 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tordadoes), or qualified disaster recovery assistance losses (as defined in Pub. 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas), the ATNOLD for the tax year is limited to the sum of: 1. The smaller of: a. The sum of the ATNOL carrybacks and carryforwards to the tax year attributable to net operating losses other than qualified disaster losses, qualified Gulf Opportunity Zone losses, qualified recovery assistance losses, and qualified disaster recovery assistance losses, or b. 90% of AMTI for the tax year (figured without regard to the ATNOLD and any domestic production activities deduction, as discussed earlier), plus 2. The smaller of: a. The sum of the ATNOL carrybacks and carryforwards to the tax year attributable to qualified disaster losses, qualified Gulf Opportunity Zone losses, qualified recovery assistance losses, and qualified disaster recovery assistance losses, or

b. 100% of AMTI for the tax year (figured without regard to the ATNOLD and any domestic production activities deduction, as discussed earlier) reduced by the amount determined under (1). Enter on line 28 the smaller of the ATNOLD or the ATNOLD limitation. Any ATNOL not used may be carried back 2 years or forward up to 20 years (15 years for loss years beginning before 1998). In some cases, the carryback period is longer than 2 years; for details, see Pub. 536. See Pub. 4492-A for the part of an ATNOL that is a qualified recovery assistance loss or Pub. 4492-B for the part of an ATNOL that is a qualified disaster recovery assistance loss. The treatment of ATNOLs does not affect your regular tax NOL. Note. If you elected under section 172(b)(3) to forgo the carryback period for the regular tax, the election also applies for the AMT.

Line 29--Alternative Minimum Taxable Income
If your filing status is married filing separately and line 29 is more than $214,900, you must include an additional amount on line 29. If line 29 is $354,800 or more, include an additional $34,975. Otherwise, include 25% of the excess of the amount on line 29 over $214,900. For example, if the amount on line 29 is $234,900, enter $239,900 instead -- the additional $5,000 is 25% of $20,000 ($234,900 minus $214,900).

Exemption Worksheet-- Line 30

Special Rule for Holders of a Residual Interest in a REMIC
Keep for Your Records
If you held a residual interest in a real estate mortgage investment conduit (REMIC) in 2008, the amount you enter on line 29 may not be less than the amount on Schedule E, line 38, column (c). If the amount in column (c) is larger than the amount you would otherwise enter on line 29, enter the amount from column (c) instead and enter "Sch. Q" on the dotted line next to line 29.

Note. If Form 6251, line 29, is equal to or more than: $297,300 if single or head of household; $429,800 if married filing jointly or qualifying widow(er); or $214,900 if married filing separately; your exemption is zero. Do not complete this worksheet; instead, enter the amount from Form 6251, line 29, on line 31 and go to line 32.

1. Enter: $46,200 if single or head of household; $69,950 if married filing jointly or qualifying widow(er); $34,975 if married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Enter your alternative minimum taxable income (AMTI) from Form 6251, line 29 . . . . . . . . . . . 2. 3. Enter: $112,500 if single or head of household; $150,000 if married filing jointly or qualifying widow(er); $75,000 if married filing separately 3. 4. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Multiply line 4 by 25% (.25) . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 1. If zero or less, enter -0-. If any of the three conditions under Certain Children Under Age 24 apply to you, complete lines 7 through 10. Otherwise, stop here and enter this amount on Form 6251, line 30, and go to Form 6251, line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Minimum exemption amount for certain children under age 24 . . 8. Enter your earned income, if any (see instructions) . . . . . . . . . 9. Add lines 7 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. Enter the smaller of line 6 or line 9 here and on Form 6251, line 30, and go to Form 6251, line 31 . . . . . . . . . . . . . . . . . . . . . .

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1.

Part II--Alternative Minimum Tax
Line 30--Exemption Amount
.. 5.

If line 29 is more than the amount shown for your filing status in the middle column of the chart on line 30, see the worksheet on this page to figure the amount to enter on line 30.

.. .. ..

6. 7. 8. 9. 10.

Certain Children Under Age 24
$6,400

Your exemption amount is limited to the amount of your earned income plus $6,400 if condition 1, 2, or 3 next applies to you. 1. You were under age 18 at the end of 2008.

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2. You were age 18 at the end of 2008 and did not have earned income that was more than half of your support. 3. You were a full-time student over age 18 and under age 24 at the end of 2008 and did not have earned income that was more than half of your support. If condition 1, 2, or 3 applies to you, complete the worksheet on page 8, including lines 7 through 10, to figure the amount to enter on Form 6251, line 30. Exception. If you filed a joint return for 2008 or neither of your parents was alive at the end of 2008, do not complete lines 7 through 10 of the worksheet on page 8. However, you still must complete lines 1 through 6 of the worksheet if Form 6251, line 29, is more than the amount shown for your filing status in the middle column of the chart on Form 6251, line 30. Certain January 1 birthdays. If you were born on January 1, 1991, you are considered to be 18 at the end of 2008. Your exemption amount is limited only if you did not have earned income that was more than half of your support. If you were born on January 1, 1990, you are considered to be 19 at the end of 2008. Your exemption amount is limited only if you were a full-time student who did not have earned income that was more than half of your support. If you were born on January 1, 1985, you are considered to be 24 at the end of 2008. Your exemption amount is not limited. Line 8 of the worksheet. Earned income includes wages, tips, and other amounts received for personal services performed. If you are a sole proprietor or a partner in a trade or business in which both personal services and

capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). However, the 30% limit does not apply if there are no net profits from the trade or business. If capital is not an income-producing factor and your personal services produced the business income, all of your gross income from the trade or business is considered earned income.

Line 33--Alternative Minimum Tax Foreign Tax Credit (AMTFTC)
To see if you need to figure your TIP AMTFTC, fill in Form 6251, line 35, as instructed. (You will first need to figure your foreign tax credit for the regular tax and complete Form 1040, line 47, or Form 1040NR, line 44.) If the amount on line 35 is greater than or equal to the amount on line 32, you do not owe the AMT. Enter -0- on line 36 and see Who Must File on page 1 to find out if you must attach Form 6251 to your return. However, even if you do not owe the AMT, you may need to complete line 33 to see if you have an AMTFTC carryback or carryforward to other tax years. If you made an election to claim the foreign tax credit on Form 1040 (or Form 1040NR) without filing Form 1116, your AMTFTC is the same as the foreign tax credit on Form 1040, line 47 (or Form 1040NR, line 44). Enter that amount on Form 6251, line 33. Otherwise, your AMTFTC is your foreign tax credit refigured as follows. Step 1. Use a separate AMT Form 1116 for each separate category of income specified at the top of Form 1116. Write "AMT" in the top margin of each Form 1116. When applying the separate categories of income, use the applicable AMT rate instead of the regular tax rate to determine if any income is "high-taxed." Step 2. If you previously made or are making the simplified limitation election (see page 11), skip Part I and enter on the AMT Form 1116, line 16, the same amount you entered on that line for the regular tax. If you did not complete

Line 32
If you claimed the foreign earned income exclusion or the housing exclusion on Form 2555 or Form 2555-EZ, you must use the worksheet below to figure the amount to enter on line 32. Form 1040NR. If you are filing Form 1040NR and you reported capital gain distributions directly on Form 1040NR, line 14; you reported qualified dividends on Form 1040NR, line 10b; or you had a gain on both lines 15 and 16 of Schedule D (Form 1040) (as refigured for the AMT, if necessary), complete Part III on page 2 of Form 6251 and enter the amount from line 55 on line 32. Otherwise, do not complete Part III. Instead, if Form 6251, line 31, is $175,000 or less ($87,500 or less if you checked filing status box 3, 4, or 5 on Form 1040NR), figure the amount to enter on line 32 by multiplying line 31 by 26% (.26). Otherwise, figure the amount to enter on line 32 by multiplying line 31 by 28% (.28) and subtracting $3,500 ($1,750 if you checked filing status box 3, 4, or 5) from the result.

Foreign Earned Income Tax Worksheet--Line 32
Before you begin:
If Form 6251, line 31, is zero, do not complete this worksheet.

Keep for Your Records

1. Enter the amount from Form 6251, line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Enter the amount from your (and your spouse's if filing jointly) Form 2555, lines 45 and 50, or Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Tax on the amount on line 3. · If you reported capital gain distributions directly on Form 1040, line 13; or you reported qualified dividends on Form 1040, line 9b; or you had a gain on both lines 15 and 16 of Schedule D (Form 1040), enter the amount from line 3 of this worksheet on Form 6251, line 37. Complete the rest of Part III of Form 6251. However, before completing Part III, see Forms 2555 and 2555-EZ, on page 11, to see if you must complete Part III with certain modifications. Then enter the amount from Form 6251, line 55, here. · All others: If line 3 is $175,000 or less ($87,500 or less if married filing separately), multiply line 3 by 26% (.26). Otherwise, multiply line 3 by 28% (.28) and subtract $3,500 ($1,750 if married filing separately) from the result. 5. Tax on the amount on line 2. If line 2 is $175,000 or less ($87,500 or less if married filing separately), multiply line 2 by 26% (.26). Otherwise, multiply line 2 by 28% (.28) and subtract $3,500 ($1,750 if married filing separately) from the result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 4. Enter the result here and on Form 6251, line 32. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. 2. 3.

}

4.

5. 6.

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Form 1116 for the regular tax and you previously made or are making the simplified limitation election, complete Part I and lines 14 through 16 of the AMT Form 1116 using regular tax amounts. If the election does not apply, complete Part I using only income and deductions that are allowed for the AMT and attributable to sources outside the United States. If you have any foreign source qualified dividends or foreign source capital gains (including any foreign source capital gain distributions) or losses, use the instructions under Step 3 to determine whether you must make adjustments to those amounts before you include the amounts on line 1a or line 5 of the AMT Form 1116. Step 3. Follow the instructions below, if applicable, to determine the amount of foreign source qualified dividends, capital gain distributions, and other capital gains and losses to include on line 1a and line 5 of the AMT Form 1116. Foreign qualified dividends. You must adjust your foreign source qualified dividends before you include those amounts on line 1a of the AMT Form 1116 if: · Line 53 of Form 6251 is smaller than line 54, and · Line 42 of Form 6251 is greater than zero. But you do not need to make any adjustments if: · You qualify for the adjustment exception under Qualified Dividends and Capital Gain Tax Worksheet (Individuals) or Adjustments to foreign qualified dividends under Schedule D Filers in the Form 1116 instructions, and · Line 42 of Form 6251 is not more than $175,000 ($87,500 if married filing separately). Note. Use your capital gains and losses as refigured for the AMT to determine whether your total amounts are less than the $20,000 threshold under the adjustment exception. To adjust your foreign source qualified dividends, multiply your foreign source qualified dividends in each separate category by 0.5357 if the foreign source qualified dividends are taxed at a rate of 15%. Include the results on line 1a of the applicable AMT Form 1116. You adjust your foreign source qualified dividends taxed at the 0% rate by not including them on line 1a. Amounts taxed at the 0% rate are on line 10 of the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions, line 8 of the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040NR instructions, or line 19 of the Schedule D Tax Worksheet.

Do not adjust the amount of any foreign source qualified CAUTION dividends you elected to include on line 4g of AMT Form 4952.

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Individuals with capital gain distributions only. If you have no capital gains or losses other than capital gain distributions from box 2a of Form(s) 1099-DIV or substitute statement(s), you must adjust your foreign source capital gain distributions if you are required to adjust your foreign source qualified dividends under the rules just described or you would be required to adjust your foreign source qualified dividends if you had any. To adjust your foreign source capital gain distributions, multiply your foreign source capital gain distributions in each separate category by 0.5357 if the foreign source capital gain distributions are taxed at a rate of 15%. Include the results on line 1a of the applicable AMT Form 1116. You adjust your foreign source capital gain distributions taxed at the 0% rate by not including them on line 1a. Amounts taxed at the 0% rate are on line 10 of the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions, line 8 of the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040NR instructions, or line 19 of the Schedule D Tax Worksheet. Do not adjust the amount of any foreign source capital gain CAUTION distributions you elected to include on line 4g of AMT Form 4952.

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Individuals with other capital gains or losses. If any capital gain or loss is different for the AMT, use amounts as refigured for the AMT to complete this step. Use Worksheet A in the instructions for Form 1116 to determine the adjustments you must make to your foreign source capital gains or losses (as refigured for the AMT) if you have foreign source capital gains or losses (as refigured for the AMT) in no more than two separate categories and any of the following apply. · You are not required to make adjustments to your foreign source qualified dividends under the rules described earlier (or you would not be required to make those adjustments if you had foreign source qualified dividends). · Line 15 or 16 of the AMT Schedule D (Form 1040) is zero or a loss. · The amount on line 3 of the AMT Qualified Dividends and Capital Gain Tax Worksheet (or line 7 of the AMT Schedule D Tax Worksheet) minus the amount on Form 4952, line 4e, that you elected to include on Form 4952, line 4g, is zero or less.

· Cannot use Worksheet A,
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Use Worksheet B if you:

and losses in no more than two separate categories, and · Did not have any item of unrecaptured section 1250 gain or 28% rate gain or loss for the AMT. Instructions for Worksheets A and B. When you complete Worksheet A or Worksheet B, use foreign source capital gains and losses, as refigured for the AMT if necessary, and do not use any foreign source capital gains you elected to include on line 4g of AMT Form 4952. If you are required to complete a Schedule D for the AMT, use line 16 of that AMT Schedule D to complete line 3 of Worksheet A or line 4 of the Line 2 Worksheet for Worksheet B. Use 0.5357 instead of 0.4286 to complete lines 11, 13, and 15 of Worksheet B and to complete lines 8, 11, and 17 of the Line 15 Worksheet for Worksheet B. If you do not qualify to use Worksheet A or Worksheet B, use the instructions for Capital Gains and Losses in Pub. 514 to determine the adjustments you make. Step 4. Complete Part II and lines 9 through 13 of the AMT Form 1116. Use your AMTFTC carryover, if any, on line 10. Step 5. If the simplified limitation election does not apply, complete lines 14 through 16 of the AMT Form 1116. Step 6. If you did not complete Part III of Form 6251, enter the amount from line 29 of Form 6251 on line 17 of the AMT Form 1116 and go to Step 7. If you completed Part III of Form 6251, you must complete, for the AMT, the Worksheet for Line 17 in the Form 1116 instructions to determine the amount to enter on line 17 of the AMT Form 1116 if: · Line 53 of Form 6251 is smaller than line 54, and · Line 42 of Form 6251 is greater than zero. But you do not need to complete the Worksheet for Line 17 if: · You qualify for the adjustment exception under Qualified Dividends and Capital Gain Tax Worksheet (Individuals) or Adjustments to foreign qualified dividends under Schedule D Filers in the Form 1116 instructions, and · Line 42 of Form 6251 is not more than $175,000 ($87,500 if married filing separately). Note. Use your capital gains and losses as refigured for the AMT to determine whether your total amounts are less than the $20,000 threshold under the adjustment exception. If you do not need to complete the Worksheet for Line 17, enter the amount from line 29 of Form 6251 on line 17 of the AMT Form 1116. Instructions for AMT Worksheet for Line 17. Follow these steps to complete, for the AMT, the Worksheet

· Have foreign source capital gains

for Line 17 in the Form 1116 instructions. 1. Enter the amount from Form 6251, line 29, on line 1 of the worksheet. 2. Skip lines 2 and 3 of the worksheet. 3. Enter the amount from Form 6251, line 51, on line 4 of the worksheet. 4. Multiply line 4 of the worksheet by 0.1071 (instead of 0.2857). Enter the result on line 5 of the worksheet. 5. Enter the amount from Form 6251, line 49, on line 6 of the worksheet. 6. Multiply line 6 of the worksheet by 0.4643 (instead of 0.5714). Enter the result on line 7 of the worksheet. 7. Enter the amount from Form 6251, line 48, on line 8 of the worksheet. 8. Complete lines 9 and 10 of the worksheet as instructed on the worksheet. Step 7. Enter the amount from Form 6251, line 32, on the AMT Form 1116, line 19. Complete lines 18, 20, and 21 of the AMT Form 1116. Step 8. Complete Part IV of the first AMT Form 1116 only. Enter on Form 6251, line 33, the amount from line 29 of the first AMT Form 1116. Attach to your tax return, after Form 6251, all AMT Forms 1116 you used to figure your AMTFTC. But do not attach AMT Forms 1116 if your AMTFTC is the same as your regular tax foreign tax credit.

tax years and may be revoked only with IRS consent.

Line 35
If you used Schedule J to figure your tax on Form 1040, line 44 (or Form 1040NR, line 41), you must refigure that tax (including any tax from Form 8814) without using Schedule J before completing this line. This is only for Form 6251; do not change the amount on Form 1040, line 44 (or Form 1040NR, line 41). Form 1040NR. If you are filing Form 1040NR, enter the tax from Form 1040NR, line 41 (minus any tax from Form 4972 and any foreign tax credit from Form 1040NR, line 44). If you used Schedule J to figure your tax, the amount on line 41 of Form 1040NR must be refigured without using Schedule J (see preceding paragraph).

Worksheet, whichever applies. (See line 20 of your AMT Schedule D, if you completed one, to determine which worksheet applies.) Complete line 5 of the AMT Qualified Dividends and Capital Gain Tax Worksheet or lines 3 and 4 of the AMT Schedule D Tax Worksheet, whichever applies, using your AMT Form 4952. Use amounts from Schedule D or the AMT Schedule D, whichever applies, and either the AMT Qualified Dividends and Capital Gain Tax Worksheet or the AMT Schedule D Tax Worksheet, whichever applies, to complete lines 38, 39, and 40 of Form 6251. Keep the AMT Schedule D and applicable worksheet for your records, but do not attach the AMT Schedule D to your tax return. Note. Do not decrease your section 1202 exclusion by the amount, if any, on line 13. Forms 2555 and 2555-EZ. If you are filing either of these forms and you have a capital gain excess, you must complete Part III of Form 6251 with certain modifications. To see if you have a capital gain excess, subtract Form 6251, line 31, from line 6 of your AMT Qualified Dividends and Capital Gain Tax Worksheet (or line 10 of your AMT Schedule D Tax Worksheet). If the result is greater than zero, that amount is your capital gain excess. If you have capital gain excess, figure the amounts to enter on lines 38, 39, and 40 of Form 6251 using the following modifications (only for purposes of Part III of Form 6251). 1. Reduce the amount you would otherwise enter on line 3 of your AMT Qualified Dividends and Capital Gain Tax Worksheet or line 9 of your AMT Schedule D Tax Worksheet (but not below zero) by your capital gain excess. 2. Reduce the amount you would otherwise enter on Form 1040, line 9b, (but not below zero) by any of your capital gain excess not used in (1). 3. Reduce the amount on your AMT Schedule D (Form 1040), line 18, (but not below zero) by your capital gain excess. 4. Include your capital gain excess as a loss on line 16 of your AMT Unrecaptured Section 1250 Gain Worksheet on page D-9 of the Instructions for Schedule D (Form 1040). Beneficiaries of estates or trusts. If you received a Schedule K-1 (Form 1041) that shows an adjustment in box 12, follow the instructions in the following table.

Part III--Tax Computation Using Maximum Capital Gains Rates
Lines 38, 39, and 40
You generally can fill out lines 38, 39, and 40 using the amounts from the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, whichever applies, and Schedule D (Form 1040), if you completed Schedule D. But do not use those amounts if any of the following statements apply. 1. Any gain or loss on Schedule D is different for the AMT (for example, because of a different basis for the AMT due to depreciation adjustments, an incentive stock option adjustment, or a different AMT capital loss carryover from 2007). 2. You did not complete either the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet because Form 1040, line 43 (or Form 1040NR, line 40), is zero. 3. You received a Schedule K-1 (Form 1041) that shows an amount in box 12 with code B, C, D, E, or F. If this applies, see Beneficiaries of estates or trusts that begins on this page. Then read the following instructions. If (1) or (3) applies, complete lines 1 through 20 of an AMT Schedule D by refiguring the amounts of your gains and losses for the AMT. Next, if (1), (2), or (3) applies, complete lines 2 through 6 of an AMT Qualified Dividends and Capital Gain Tax Worksheet or lines 2 through 13 of an AMT Schedule D Tax

AMTFTC Carryback and Carryforward
If your AMTFTC is limited, the unused amount generally may be carried back or forward according to section 904(c). However, if you made the election to claim the foreign tax credit on Form 1040 (or Form 1040NR) without filing Form 1116, any unused AMTFTC cannot be carried back or forward. In addition, no unused AMTFTC from another year can be used in any year for which the election has been made.

Simplified Limitation Election
You may elect to use a simplified section 904 limitation to figure your AMTFTC. If you do, use your regular tax income for Form 1116, Part I, instead of refiguring your foreign source income for the AMT, as described earlier. You must make the election for the first tax year after 1997 for which you claim an AMTFTC. If you do not make the election for that year, you may not make it for a later year. Once made, the election applies to all later

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IF the code in THEN include that box 12 is... adjustment in figuring the amount on... B line 2 of an AMT Qualified Dividends and Capital Gain Tax Worksheet or an AMT Schedule D Tax Worksheet, whichever applies. line 5, column (f), of an AMT Schedule D. line 12, column (f), of an AMT Schedule D. line 11 of an AMT Unrecaptured Section 1250 Gain Worksheet. line 4 of an AMT 28% Rate Gain Worksheet.

($87,500 or less if you checked filing status box 3, 4, or 5), multiply line 42 by 26% (.26). Otherwise, multiply line 42 by 28% (.28) and subtract $3,500 ($1,750 if you checked filing status box 3, 4, or 5) from the result.

Line 44
If you are filing Form 1040NR, enter $32,550 ($65,100 if you checked filing status box 6).

C D E

Line 45
If you are filing Form 1040NR, enter on Form 6251, line 45, the amount from line 5 of the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040NR, line 41, or the amount from line 14 of the Schedule D Tax Worksheet on page D-10 of the instructions for Schedule D (Form 1040), whichever applies (as figured for the regular tax). If you did not complete either worksheet for the regular tax, enter -0-.

F

Form 1040NR. If you are filing Form 1040NR, enter on Form 6251, line 38, the amount from line 4 of the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040NR, line 41, or the amount from line 13 of the Schedule D Tax Worksheet on page D-10 of the instructions for Schedule D (Form 1040), whichever applies (as refigured for the AMT, if necessary).

Line 54
If you are filing Form 1040NR and Form 6251, line 37, is $175,000 or less ($87,500 or less if you checked filing status box 3, 4, or 5), multiply line 37 by 26% (.26). Otherwise, multiply line 37 by 28% (.28) and subtract $3,500 ($1,750 if you checked filing status box 3, 4, or 5) from the result.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The average time and expenses required to complete and file this form will vary depending on individual circumstances. For the estimated averages, see the instructions for your income tax return. If you have suggestions for making this form simpler, we would be happy to hear from you. See the instructions for your income tax return.

Line 43
If you are filing Form 1040NR and Form 6251, line 42, is $175,000 or less

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