Drew Edmundson wrote:

- quote -

My catch is that I don't recall that the early 1990s
personal TurboTax variant would have necessarily stepped a
nonprofessional through the process of getting the proper
AMT depreciation and basis information into the system.
And, in any event, as we all know, the AMT is a bit involved
and we catch AMT issues in software from time to time--a
nonprofessional who is assuming that "TurboTax took care of
it" is not likely to know what to look for to see there are
issues that either Turbotax didn't take care of, or where
they misunderstood the questions being asked.

Now, it's possible the real result is what is coming out of
TurboTax right now. But I suspect we are both more than
just slightly skeptical of the result being reported <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote:
- quote -

I agree with you Ed that he needs to have someone with
experience in AMT look at this. The professional version of
TurboTax (ProSeries) makes this adjustment automatically on
disposition (assuming the right input) so I wouldn't be
surprised if the personal version also automatically made
the adjustment. However there are other AMT adjustments
ProSeries does not make.

The ProSeries version doesn't always calculate Form 6251,
Lines 37 and 38 correctly so this could be part of his
problem.

Drew Edmundson, CPA (NC)

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"D. Stussy" wrote:
- quote -

OOPS. You're correct, there.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Arthur L. Rubin wrote:

- quote -

No. They go on schedule E. However, the 8582 will include
the Schedule D amounts as well as schedule E, since the sale
of a passive activity's asset is still a passive
transaction.

- quote -

Don't forget that your AMT basis might have been different
too. Prorated property taxes on the escrow which may be
expensed under the regular tax system get capitalized as an
acquisition cost for AMT (because they are paid to the prior
owner, not the taxing authority, and thus aren't really a
section 163 tax).

- quote -

I thought that the form was 8801 (credit for prior year AMT).

Form 8812 relates to additional child tax credits.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

JoeTaxpayer[at]NOSPAM.COM wrote:
- quote -

No -- Ed's probably right. I STILL haven't researched this.
But I wouldn't necessarily bet on Turbotax doing it right.

However -- as both Ed and I pointed out (although Ed did it
more clearly), if the only AMT basis adjustments are on your
rental, then the AMT schedule E-equivalent loss should be
less by the difference in depreciation, and your AMT
schedule D should show a loss equal to that difference in
depreciation. Only $3000 of that loss is deductable (from
AMT income) this year, and the remainder of that loss is
clearly a timing item, so could give you limited credits for
previously paid AMT in future years.

You need an actual tax preparer, because Turbotax may very
well have not recalculated the AMT schedule D.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

JoeTaxpayer[at]NOSPAM.COM wrote:

- quote -

What is shown on lines 16 and 18 of the Form 6251? That is,
was there a proper computation of the following:

1. AMT gain on sale of asset (should have been less than
the regular tax gain, though it may be fully absorbed by
your capital losses, resulting in a $3K per year for AMT
purposes).

2. AMT loss on complete disposition. Like your regular tax
Schedule E, your AMT version of Schedule E should have
released losses that have been "pent up" over the past ten
years.

Line 17 is the current year depreciation
adjustment--depending on the type of property and how you
depreciated it, that number could be negative--but it would
seem unlikely to be anywhere near the amount of depreciation
claimed this year.

My concern is that you need to have someone who understands
this take a look at the AMT calculations. I don't remember
for sure, but I'm pretty sure that the personal version of
TurboTax used to "punt" on AMT passive loss calculations, in
which case it may be *really* fouled up in the year of
disposition as it would not have picked up losses prior to
the point that Intuit started tracking this.

--
Ed Zollars, CPA
Phoenix, Arizona

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Arthur L. Rubin wrote:
- quote -

For the last ten years, all my net real estate losses were
not deductable on E due to being over the income limits. So
this year when I sold the property, and entered all the info
into Turbotax, I found that all the loss showed up on sch E,
and since the property was reduced in cost basis over the
year due to depreciation, a large capital gain landed on
Schedule D. Given that I had to make some quick decisions, I
sold some stocks that had serious losses (and otherwise
would have been limited to $3K/yr) to negate the Sch D gain,
bringing it down to -0-. Line 17 is left with a healthy
number, that came from sch E. FWIW, last year's (return for
tax year 02) return had zero AMT, and having refinanced in
03 brought my mortgage deduction down by well over 5% of my
gross income. Without that big E, I'd have been well on the
other side of AMT.

I appreciate the advice here. If I'm totally off-base on how
the gain went to D and the losses to E, please set me
straight. It seemed straightforward as I entered the info on
Turbotax, it's not like I told it where to sent the
numbers.....

Thanks,
JOE

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Arthur L. Rubin wrote:

- quote -

Actually, they don't move there. Rather, Section 469 merely
"suspends" the deduction--once it's released, it impacts
taxable income as it would have had it been deductible in
the year incurred. So you often get a 1231 gain and an
ordinary deduction in the year of sale.

However, in this case there should also be a suspended loss
for AMT purposes that is released. And, as you note, the
gain for AMT purposes normally will be less than the gain
for regular tax purposes.

- quote -

I don't think it hurts directly--but what may be happening
is that he has a lower suspended AMT loss because less would
have been deductible in the past, most likely due to lower
depreciation. However, his gain on disposal would also have
been lower and if depreciation was the sole difference,
those would net out to zero. *However* since he had totally
offset the gain with capital losses, for AMT purposes that
may create only a net capital loss carryforward that is now
suspended under totally different rules <grin> .

Nevertheless, given his confusion over the matter and the
dollars involved, I would suggest it might make a *lot* of
sense for him to pay someone experienced in AMT issues to
look at his situation to first make sure that the situation
really is as he views it.

The situation may be as he sees it--but, then again, it may
not. The fact that he didn't go into detail on AMT vs.
regular tax gain on disposal, or the relative amount of AMT
469 loss released vs. the regular tax loss released is
certainly a reason to question whether those items have been
considered properly. I'll put it this way--if, in fact, the
AMT passive loss carryover and the release of the same
wasn't factored into the equation could easily create a
significant AMT liability being computed, especially if
software is being used that automatically is adding back the
regular tax passive loss allowed but has no information on
the AMT carryovers.

As I recall, a few years ago many of the major consumer tax
programs simply "punted" on this issue (the passive activity
AMT adjustment was an item you had to manually enter), so
even if that is no longer the case (and I believe they do
handle it better now), anyone who was simply "rolling
forward" information from year to year who hadn't manually
entered the proper AMT 469 carryover when the programs first
starting tracking it could up with a grossly understated
passive loss carryover--and the software would then blithely
compute an excessively high AMT tax liability in the year of
sale.

For $12,000 you can pay for a few hours of even the highest
priced tax advisers to look at the situation <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

JoeTaxpayer[at]NOSPAM.COM wrote:

- quote -

A quick note:

I think we need more information, but I thought that that
suspended losses are not included on schedule E, but are
carried over to the schedule D calculations. (If I'm wrong
here, would someone correct me?)

Have you included the recalculation of schedule D for AMT
purposes, taking into account the lower AMT depreciation?
(If I read your full post correctly, that HURTS you, but I
thought I'd ask.)

If I'm wrong as to the first part, then your AMT Schedule D
loss carryover is a timing item, so it can be taken into
account on the 8812 next year.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

JoeTaxpayer[at]NOSPAM.COM wrote:

- quote -

While the AMT can produce unusual results, I'm wondering if
you've computed the proper AMT rental loss and carryover for
that rental. Now it's possible there could be an issue due
to a larger regular tax than AMT passive loss carryover that
is released, though that should create a capital loss
carryover for AMT purposes.

To the extent you are subject to the AMT, whether you can
later recover that amount will depend on what tripped up
your AMT and your future income. However, if your AMT is
triggered primarily due to timing differences (most often
AMT triggers other than itemized deductions), you would get
a credit to carry forward. In essence, that will push you
down to the AMT tax level in future years when the AMT
computed tax is less than the regular tax until you exhaust
the credit.

But it's very difficult for anyone here to give you a "for
sure" answer without seeing your entire return (and perhaps
prior year returns) due to the interactions involved.

--
Ed Zollars, CPA
Phoenix, Arizona

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I've just done a dry run of my taxes and the bottom line is
my return will show about $8000 in AMT, (ie, I would have
gotten a refund of $12K, but will ony get $4k due to that
AMT number).

There were some unusual events for me last year. Sale of
rental property produced a schedule D gain, but a near equal
amount in depreciation expense that I got to take on the
sale, carried forward all these years. And then enough stock
loss to cancell out the Sch D gain right down to 0. So it's
just line 17 now showing large (50K) loss, plus the usual
Sch A mortgage/prop tax.

So my question is; since I'm done with real estate rentals,
is that $8k gone forever or do I somehow get it back in
future years? I was so close to understanding the tax basics
or so I thought, and then AMT kicked in. For my question,
assume that in 04 I would be well on the other side of the
AMT risk, so anything I can do to understand the year to
year nature of the AMT would be helpful.

Thanks all,
JOE

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->