2003 Tax Help Archives  
  Home > Tax Help Archives > 2003 > Publications > Publication 225
Publication 225 2003 Tax Year

Alternative Minimum Tax

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Introduction

The tax laws give special treatment to some types of income, allow special deductions for some types of expenses, and allow credits for certain taxpayers. These laws enable some taxpayers with substantial economic income to significantly reduce their regular tax. The alternative minimum tax (AMT) ensures that these taxpayers pay at least a minimum amount of tax on their economic income.

This chapter discusses the AMT for individuals. For information about the AMT for corporations, see Publication 542, Corporations.

Topics - This chapter discusses:

  • Form 6251
  • Records you must keep
  • Credit for prior year minimum tax

Useful Items - You may want to see:

Form (and Instructions)

  • 1040 U.S. Individual Income Tax Return
  • Sch A (Form 1040) Itemized Deductions
  • 6251 Alternative Minimum Tax—Individuals
  • 8801 Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts

See chapter 21 for information about getting publications and forms.

Form 6251

Individuals use Form 6251 to figure their AMT. They also use the form when figuring certain credit limitations.

Figuring AMT.

Use the worksheet in Table 14–1 to see if you should fill in Form 6251 to figure the amount, if any, of your AMT.

Exception.

Fill in Form 6251 instead of using the worksheet if you claimed or received any of the following items.

  • Accelerated depreciation.
  • Income or (loss) from tax-shelter farm activities or passive activities.
  • Net operating loss deduction.
  • The credit for fuel produced from a nonconventional source, the qualified electric vehicle credit, or any general business credit.
  • Stock by exercising an incentive stock option and you did not dispose of the stock in the same year.
  • Tax-exempt interest from private activity bonds.
  • Intangible drilling, circulation, research, experimental, or mining costs.
  • Amortization of pollution-control facilities or depletion.
  • Income from long-term contracts not figured using the percentage-of-completion method.
  • Interest paid on a home mortgage not used to buy, build, or substantially improve your home.
  • Investment interest expense reported on Form 4952.
  • AMT adjustments from an estate, trust, electing large partnership, or a cooperative.
  • Section 1202 exclusion.


After you fill in Form 6251, see Who Must File in the form instructions to see if you need to attach it to your tax return.

Child under age 14.

Fill in Form 6251 for a child under age 14 if the child's adjusted gross income from Form 1040, line 35, exceeds the child's earned income by more than $5,600.

Figuring credit limitations.

Although you may not owe AMT, you generally must still figure your tentative minimum tax on Form 6251 to figure certain credits. Fill in Form 6251 if you claim any of the following credits.

  • Any general business credit
    (see chapter 9).
  • The qualified electric vehicle credit
    (see chapter 12 in Publication 535).
  • The nonconventional source fuel credit (see section 29 of the Internal Revenue Code).
  • The credit for prior year minimum tax (discussed later).


After you fill in Form 6251, attach it to your tax return.

Records You
Must Keep

Records you should keep

Due to AMT adjustments, you may have a different AMT basis in certain property or activities. Because your AMT basis may affect the computation of AMT in future tax years, you may need to figure the adjustments that affect basis, even though you do not owe AMT this year. You should keep a separate record of your AMT adjusted basis, including an AMT depreciation schedule.

Carrybacks and carryovers of certain deductions and credits may have to be refigured for AMT purposes. You should keep a separate record of these AMT carrybacks and carryovers to assist you in preparing your return in other years.

Credit for Prior Year Minimum Tax

Individuals use Form 8801 to figure their minimum tax credit, if any, for AMT incurred in prior tax years. They also use the form to figure any minimum tax credit carryforward.

Form 8801.

Fill in Form 8801 if you had any of the following for 2002.

  • An AMT liability and adjustments or preferences that do not cause a permanent difference in taxable income over time.
  • A minimum tax credit carryforward to 2003.
  • An unallowed nonconventional source fuel credit or qualified electric vehicle credit.


For more information, see Form 8801.

Reduction for canceled debt.

You may have to reduce the credit if you exclude from income a canceled debt from any of the following.

  • A bankruptcy case.
  • Insolvency.
  • Qualified farm debt.

You must reduce the amount available at the beginning of the year after the debt was canceled before preparing Form 8801 for that year. For more information, see Cancellation of Debt in chapter 4.

Table 14–1. Worksheet to See if You Should Fill in Form 6251

(Keep for your records)
Before you begin: ✓ Be sure you have read the discussion under Form 6251 in this chapter
before using this worksheet. 		 
Worksheet you may need to fill in
1.   Are you filing Schedule A?
    □ Yes.
 Enter the amount from Form 1040, line 38.    
    □ No. Enter the amount from Form 1040, line 35, and go to line 4. 1.  
2.   Enter the smaller of the amount on Schedule A, line 4, or 2.5% (.025) of the amount on Form 1040, line 35. 2.  
3.   Add lines 9 and 26 of Schedule A and enter the total 3.  
4.   Add lines 1 through 3 4.  
5.   Enter the amount shown below for your filing status.    
 
  • Single or head of household—$40,250
  • Married filing jointly or qualifying widow(er)—$58,000
  • Married filing separately—$29,000
Right brace
 5.  
6.   Is the amount on line 4 more than the amount on line 5?    
    □ No.
Stop reading here. This doesn't apply to you
 You do not need to fill in Form 6251.    
    □ Yes. Subtract line 5 from line 4 6.  
7.   Enter the amount shown below for your filing status.    
 
  • Single or head of household—$112,500
  • Married filing jointly or qualifying widow(er)—$150,000
  • Married filing separately—$75,000
Right brace
 7.  
8.   Is the amount on line 4 more than the amount on line 7?    
    □ No. Enter the amount from line 6 on line 10 and go to line 11.
Right brace
 8.  
    □ Yes. Subtract line 7 from line 4.
9.   Multiply line 8 by 25% (.25) and enter the result but do not enter more than line 5 above 9.  
10.   Add lines 6 and 9 10.  
11.   Is the amount on line 10 more than $175,000 ($87,500 if married filing separately)?    
    □ Yes.
Stop reading here. This doesn't apply to you
 Fill in Form 6251 to see if you owe the alternative minimum tax.    
    □ No. Multiply line 10 by 26% (.26) 11.  
12.   Enter the amount from Form 1040, line 41, minus the total of any tax from Form 4972 and any amount on Form 1040, line 44 12.  
Next. Is the amount on line 11 more than the amount on line 12?    
    □ Yes. Fill in Form 6251 to see if you owe the alternative minimum tax.    
    □ No. Do not fill in Form 6251.    

Publications Index | 2003 Tax Help Archives | Tax Help Archives | Home