This article explains how to calculate Alternative Minimum Tax (AMT) depreciation for assets with special depreciation.
Calculating AMT depreciation for an individual return
Depreciation that must be refigured for the AMT
Generally, you must refigure depreciation for the AMT, including depreciation allocable to inventory costs, if the property fulfills the following requirements: (from Form 6251 instructions, pages 4 and 5)
- Was placed in service after 1998
- Depreciated for the regular tax using the 200% declining balance method (generally 3, 5, 7, and 10-year property under the modified accelerated cost recovery system (MACRS))
- Except for qualified property eligible for the special depreciation allowance
Depreciation not refigured for the AMT
Don't refigure depreciation for the AMT for the following:
- Qualified property that is or was eligible for a special depreciation allowance, if the depreciable basis of the property for the AMT is the same as for the regular tax.
- This applies to any special depreciation allowance, including those for qualified disaster assistance property, qualified cellulosic biofuel plant property, qualified New York Liberty Zone property, and Kansas disaster area-qualified recovery assistance property.
- The special allowance is deductible for the AMT, and there's no adjustment required for any depreciation figured on the remaining basis of the qualified property, if the depreciable basis of the property for the AMT is the same as for the regular tax.
- Property for which an election is in effect to not have the special allowance apply, isn't qualified property.
Calculating AMT depreciation for a corporate return
Depreciation that must be refigured for the AMT
Generally, the corporation must refigure depreciation for the AMT, including depreciation allocable to inventory costs, if the property meets the following requirements: (from Form 4626 instructions, page 2)
- Was placed in service after 1998
- Depreciated for the regular tax using the 200% declining balance method (generally 3, 5, 7, or 10 year property under the modified accelerated cost recovery system (MACRS))
- Except for qualified property eligible for the special depreciation allowance
Depreciation not refigured for the AMT
Don't refigure depreciation for the AMT for the following:
- Any qualified property eligible for a special depreciation allowance if the depreciable basis of the property for the AMT is the same as for the regular tax.
- If the depreciable basis for the AMT is the same as for the regular tax, no adjustment is required for any depreciation figured on the remaining basis of the qualified property.
- However, if an election is in effect to no have the special allowance apply, the corporation must refigure depreciation for the AMT.
