sftydvr wrote:

- quote -

You're fine. I'm not sure of the exact IRS publication, but
you might try the (2002) form 6251 instructions:

Line 17 (Depreciation) instructions describe the difference
between AMT depreciation and regular depreciation. I hope
you've already been doing that.

Part III (lines 37, 38, 39, and 43) instructions mention
that you need to refigure schedule D for AMT purposes using
the AMT depreciation adjustment to basis. You should also
note that the maximum tax rate on capital gains (and on
unrecovered depreciation) applies for AMT purposes as well
as for regular tax purposes.

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sftydvr wrote:

- quote -

See Internal Revenue Code §56(a)(6) (by the way, when we use
the term "Internal Revenue Code" that's a shorthand
reference to Title 26 of the United States Code for anyone
looking at publicly available sources).

As an introduction, §56(a) begins with the following clause:

"a) Adjustments applicable to all taxpayers.

In determining the amount of the alternative minimum taxable
income for any taxable year the following treatment shall
apply (in lieu of the treatment applicable for purposes of
computing the regular tax): ..."

Followed by a set of paragraphs describing various differing
treatments. The paragraph you are interested in is the one
below:

"(6) Adjusted basis.
The adjusted basis of any property to which paragraph (1) or
(5) applies (or with respect to which there are any
expenditures to which paragraph (2) or subsection (b)(2)
applies) shall be determined on the basis of the treatment
prescribed in paragraph (1) , (2) , or (5) , or subsection
(b)(2) , whichever applies."

IRS §56(a)(1) (the "paragraph (1)" referenced above)
provides for the depreciation adjustment for alternative
minimum tax purposes. The opening clause tells us we take
the "regular tax rules" (depreciation basis adjustments,
recaptures and "unrecaptured recapture" <grin> rules) but
apply them using the AMT depreciation to compute an AMT
adjustment for the basis.

Don't ask me to find this in the IRS Publications or
instructions, since as most regulars around here know, those
are not binding guidance. If the publications or
instructions are not in agreement with the law, the law
controls--and the most the publications do for you is allow
you "reasonable cause" to escape penalties--not the tax or
interest due if the IRS assesses you.

--
Ed Zollars, CPA
Phoenix, Arizona

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I'm having difficulty finding where the handling of a
substantial capital gain from the sale of a partially
depreciated residential rental property is explained in the
AMT realm. The sale triggers major AMT and the recovery
treatment of previous depreciation. I have the impression
from reading non-IRS sources that the lesser depreciation
calculated as AMT depreciation (40 vs. 27.5 year) comes into
play. Is this explained anywhere in IRS publications? I've
looked in the normal publications and instructions. Am I
out in left field here?

Thanks,

Bruce…

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