Form 8801 Change in Filing Status

[EA Carol]

My client was divorced in 2008. She filed jointly in 2007 and paid Alt Min. Any guideline to see if she is eligible for Minimum Tax? Do I enter in the entire info from 2007 Form 6251 or do I do it by the percentage of her income.
Thanks to everyone in advance

[erchess]

Alternative Minimum Tax Credit?

I assume that you are trying to see if she is eligible for the Alternative Minimum Tax Credit. I have looked in both the TTB and the Instructions for the AMT Credit Form without finding the answer so I have no idea. Maybe one of the really smart people will post the answer.

[S T]

I posted as well

Carol, I had a similar issue a few months back, and received no response to my post

I also could not find much in the way of instruction, but I did find an old post http://www.thetaxbook.com/forums/sho...ight=form+8801

Don't remember what I actually ended up doing, but it was either recalculating as MFS or single.

Please post if you discover any information.

Sandy

[erchess]

Utterly Amazed

I am just utterly amazed that there isn't someone on this board who knows the answer or at least can look it up quickly. Carol I think you might also PM NYEA Bees or Veritas among many others I could name. And yes if you do find a definite answer to the question please do enlighten us.

Since you are an EA perhaps you belong to NAEA and could post on our bulletin board. If you're not, PM me and I will post. Both NAEA and NATP have research services and if you belong to the latter you even get a free question every year. What bothers me is that there has to be an answer to this in settled law because it is too common for people to get divorced or start filing MFS after filing MFJ.

[JG EA]

Agree that this is a question for NATP.

Notice this instruction for 8801. I know it is for a specific Form but notice the principle:

Enter the amount from your (and your spouse’s if filing jointly) 2007 Form 2555, line 45, or 2007 Form 2555-EZ, line
18 .

.That would seem to indicate 50/50 to me. . . . . .

[Davc]

NOLs and Capital Losses are both attributed to the individual TP's on MFS returns and I would assume an AMT credit is also.

[Snaggletoof]

Possible Answer to This

Don't expect to find an answer for something like this in TTB unless you wish for our 600 page book to be expanded to 4000 pages next year. If you don't know the answer yourself, don't complain about the rest of us not knowing either.

Although not pretending to know myself, I have used a method on other divorce/separate issues that the IRS has accepted in the past. I believe the IRS-sanctioned method would be as follows:

Split all income, adjustments, deductions, etc. into their proper incurrence by spouse. Calculate the tax as if each spouse were filing a MFS return. This will almost always insure that the tax will be higher than the reported tax. But then reduce each tax by the proportion that the filed tax bears to the recalculated MFS tax, such that the total tax equals the tax reported on original return.

Split the other taxes, credits and payments by the appropriate spouse. In cases where the credits are joint, split the credits in the same proportion as the taxes were split between the spouses. [Example: hubby's tax is $30K, wife is $20K, and joint estimated payments of $20K were made. The estimated payments would be applies 60:40, or $12K to husband and $8K to wife].

The results are appropriate for tax refunds, amended returns, etc. I have used this method a number of times, although never for Form 8801. My best guess would be to assign the original AMT by the method above, and one spouse will probably have AMT and other will not. If this happens, then NONE of the 8801 would apply to the spouse that doesn't have the AMT. If they BOTH have AMT, then split the original AMT in proportion to their combined tax and preference items.

I do think someone at NATP or NAEA will be capable of answering, but I would suggest submitting numbers, and how the numbers are split between the spouses. If we don't do that, the subject is so spousal-dependent that the experts would probably decline to answer.

[Kram BergGold]

It is problematic

I had a client in this situation. There was a possiblity that they could file H of H and MFS in 2006 but I could not figure out a way to deal witht the AMT issue. So I filed them Joint. Then in 2007 when I clearly was going to have to deal with this, as they were divorced, they both went away. When I tried to allocate things especially on fomr 8801 it just would not work. If you coem up with a solution please post it.

[erchess]

Complaining

Snags your answer makes a lot of sense. I especially like the idea of giving the real numbers when consulting NATP or NAEA.

I wasn't complaining either about the great users of this board or the great book. I was expressing surprise. When I complain you'll know it. I persist in being surprised because I would have thought that this would be a very common situation but maybe it isn't. Or maybe my error was assuming that it would be only a rarely occurring situation for which there would not be an answer in settled law.

[RYKEL12]

Would the calculation be this common sense for changing from married filing seperate TO married filing joint? I have this situation with a couple who only filed sep but with one dying in 2011..we are filing joint so that the remaining spouse can carryforward all the credits. Trying to figure out form 8801 in this situation when it is asking for previous years figures. Do I combine?

[Kram BergGold]

No One Knows

I had to deal with this issue 4 or 5 years ago. NATP could not help. I talked to others to no avail and I tried to play with it myself but could not figure out how to allocate the numbers on the prior year's 6251 and 8606 to make any sense. All I can say is good luck.