Have a Tax Question? Ask a Tax Expert
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?
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:
19. $219,682 Passive activities
29. 755,902 AMT income
34. 204,404 Tentative minimum tax
35. 145,363 Tax from Form 1040, line 44
36. 59,041 AMT
44. 65,100 Married filing jointly
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!
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.