Alternative Minimum Tax 2011
The tax law provides exclusions for certain kinds of income and deductions and credits for certain expenses. The alternative minimum tax (AMT) attempts to ensure that an individual who benefits from certain exclusions, deductions, or credits pays at least a minimum amount of tax.
The AMT is a separately figured tax that eliminates or reduces many exclusions and deductions. In addition, certain credits (generally, business-related credits) cannot be used to offset the AMT. Thus the AMT increases the tax liability of an individual who would otherwise pay less tax. The AMT tax rates on ordinary income are percentages set by law. For capital gains and certain dividends, the rates in effect for the regular tax are used.
2011 Instructions for Form 6251 – Alternative Minimum Tax—Individuals
The exemption amount has increased to $48,450 ($74,450 if married filing jointly or qualifying widow(er); $37,225 if married filing separately).
Who Must File
Attach Form 6251 to your return if any of the following statements is true.
- Form 6251, line 31, is greater than line 34.
- You claim any general business credit, and either line 6 (in Part I) or line 25 of Form 3800 is more than zero.
- You claim the qualified electric vehicle credit, the personal use part of the alternative fuel vehicle refueling property credit, or the credit for prior year minimum tax.
- The total of Form 6251, lines 8 through 27, is negative and line 31 would be greater than line 34 if you did not take into account lines 8 through 27.
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 help you figure the tax liability limit on the credits listed under Who Must File.
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 32.
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.
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.
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 30. If your net gain from the disposition of U.S. real property interests and the amount on line 28 are both greater than the tentative amount you figured for line 30, replace the amount on line 30 with the smaller of that net gain or the amount on line 28. Also, enter “RPI” on the dotted line next to line 30. Otherwise, do not change line 30.
Credit for Prior Year Minimum Tax
See Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts, if you paid AMT for 2010 or you had a minimum tax credit carryforward on your 2010 Form 8801. If you pay AMT for 2011, you may be able to take a credit on Form 8801 for 2012.
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))
Use Form 6251 to figure the amount, if any, of your alternative minimum tax (AMT). The AMT applies to taxpayers who have ceertain 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.
To find out if you may be subject to the AMT, refer to the Form 1040 Instructions and the Form 1040A Instructions. If you are filing the Form 1040 you may use the AMT Assistant for Individuals, which is an electronic version of the AMT worksheet available on the IRS web page at www.irs.gov. The AMT worksheet may tell you that you do not owe the AMT or it may direct you to Form 6251, Alternative Minimum Tax – Individuals. If you are directed to Form 6251, you will have to complete that form to determine whether you owe the AMT. Form 6251 (PDF), Alternative Minimum Tax – Individuals, is available in a PDF format on the IRS web page.
If you are not liable for AMT this year, but you paid AMT in one or more previous years, you may be eligible to take a special minimum tax credit against your regular tax this year. If eligible, you should complete and attach Form 8801 (PDF), Credit for Prior Year Minimum Tax – Individuals, Estates, and Trusts.