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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3005
Experience:  I've prepared all types of taxes since 1987.
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Line 19 of my 2008 Form 6251 seems to include $219,682 of the

Resolved Question:

Line 19 of my 2008 Form 6251 seems to include $219,682 of the AGI in Line 1, $536,580. My CPA seems unable to get around double counting my passive income.

In analyzing my 2008 marginal tax rate, I noticed:
- The income for 2008 was $256,000 higher than for 2007
- The 2008 income tax was $140,800 higher than for 2007
- Consequently, the marginal income tax of $140,800 on the income increase of $256,000 amounted to 68.88%.

Other info: My Dallas property taxes are $10,000 per year. I pay no mortgage interest or state income tax. My wife and I have three kids -- 18, 17, and 15 as of 12/31/08. No other deductions.

The result of adding $536,580 (line 1) to $219,682 (line 19) is $755,902 AMT income (line 29. But assure you: I haven't seen anywhere near that income, not even in gross income. My 2008 Total Income is the same as my AGI -- $536,580.
Submitted: 5 years ago.
Category: Tax
Expert:  RD replied 5 years ago.

What is your AGI?

 

What is your income on Form 1040 -Line 38. I presume that since you only have property tax payment- you are not itemizing your tax deductions.

 

What other adjustments do you see on Form 6251? What passive activities do you own and why is the AMT passive income so different than the Regular passive income?

 

 

Customer: replied 5 years ago.

What is your AGI?

Answer: $536,580

 

What is your income on Form 1040 -Line 38. I presume that since you only have property tax payment- you are not itemizing your tax deductions.

Answer: $536,580. The figure in Line 40 is $11,900. I don’t know whether this is my standard deduction or the total of my itemized deductions.

 

What other adjustments do you see on Form 6251?

 

Answer: Below are the figures from the various line of Form 6251:

1. 536,580

17. -256

18. -104

19. $219,682 Passive activities

28. -0-

29. 755,902 AMT income

30. -0-

31. 755,902

32. 204,404

34. 204,404 Tentative minimum tax

35. 145,363 Tax from Form 1040, line 44

36. 59,041 AMT

37. 755,902

38. 28,837

40. 28,837

41. 28,837

42. 727,065

43. 200,078

44. 65,100 Married filing jointly

45. 484,178

46. -0-

47. 28,837

48. -0-

49. 28,837

50. 4,326

53. 204,404

54. 208,153

55. 204,404

 

What passive activities do you own and why is the AMT passive income so different than the Regular passive income?

 

Answer: My passive income derives from my 72% ownership in a family limited partnership that:

 

1) Received $350,000 in royalties (in ’09 this will reduce to roughly $150,000)

2) Had about $120,000 gross income from five rent houses (in ’09 this will reduce to roughly $100,000)


My best guess at why the AMT passive income is so different from the regular passive income is that the Line 19 figure of $219,682 was already counted in determining the $536,580 figure in Line 1. In other words, I suppose I am paying income tax twice on the $219,682.

 

Here’s a way to raise taxes: declare that the highest income tax rate is 35%. But then require that passive income be taxed twice!

 

Customer: replied 5 years ago.
Relist: No answer yet.
Question: What is your AGI?

Answer: $536,580

Question: What is your income on Form 1040 -Line 38. I presume that since you only have property tax payment- you are not itemizing your tax deductions.

Answer: $536,580. The figure in Line 40 is $11,900. I don't know whether this is my standard deduction or the total of my itemized deductions.

Question: What other adjustments do you see on Form 6251?

Answer: Below are the figures from the various liness of Form 6251:

1. 536,580
17. -256
18. -104
19. $219,682
28. -0-
29. 755,902

30. -0-
31. 755,902
32. 204,404
34. 204,404
35. 145,363
36. 59,041
37. 755,902
38. 28,837
40. 28,837
41. 28,837
42. 727,065
43. 200,078
44. 65,100
45. 484,178
46. -0-
47. 28,837
48. -0-
49. 28,837
50. 4,326
53. 204,404
54. 208,153
55. 204,404

Question: What passive activities do you own and why is the AMT passive income so different than the Regular passive income?

Answer: My passive income derives from my 72% ownership in a family limited partnership that:
1) Received $350,000 in royalties (in '09 this will reduce to roughly $150,000)
2) Had about $120,000 gross income from five rent houses (in '09 this will reduce to roughly $100,000)
My best guess at why the AMT passive income is so different from the regular passive income is that the Line 19 figure of $219,682 was already counted in determining the $536,580 figure in Line 1. In other words, I suppose I am paying income tax twice on the $219,682.
Expert:  jgordosea replied 5 years ago.

Greetings,

 

If the entire amount of your passive gain is being added back on line 19 of Form 6251 that is very likely not correct.

 

The amount on line 19 is to be the "difference between AMT and regular tax income or loss" as that line is described on the form. See http://www.irs.gov/pub/irs-pdf/f6251.pdf

 

From the instuctions at http://www.unclefed.com/Tax-Help/instrs/i6251/ch02.html#d0e608 : '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.'

 

So, it would be very unusual for the amount of the adjustment on line 19 (the "difference between AMT and regular tax income or loss") to be equal to the entire amount of the gain or loss. On about 470K of passive income it would be unusual to have almost 220K of difference between AMT and regular tax income; but I can not rule out that it is possible (especially if these are oil and gas royalties).

 

Your accountant should not be double counting your passive income; but should be refiguring that passive income using the AMT rules (such as different depreciaiton methods). The difference between the refigured AMT passive income and the regular tax passive income is the correct entry on line 19 of Form 6251.

 

Your accountanct should be able to identify what makes up the entry on line 19 for you.

 

I hope this helps for you to understand the amount that is to be on the Form 6251.

 

Best wishes.

 

 

 

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3005
Experience: I've prepared all types of taxes since 1987.
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