AMT Negative Depreciation

[Golden Rocket]

I have a low-income taxpayer who has a farm and is austere beyond belief. He has the first dollar he ever earned, so long ago that George Washington looks young. He lives in an old farmhouse that his wife keeps immaculate.

Out of his paltry income, he has saved over the years. So much that his interest income has been moving him up in the tax brackets. He is no longer low-income.

In the days when he depreciated his equipment and cattle, his AMT depreciation lagged behind his "regular" depreciation, and these were also the days before 150%. His AMT depreciation adjustment is now NEGATIVE.

Assuming he runs into trouble with AMT because of land taxes, etc. can he apply the negative depreciation adjustment, even though he was never subjected to AMT when the depreciation adjustment was "positive."??

I don't know why not, but I'll ask. I'm thinking the answer might be different if the positive depreciation in the past had pushed him into AMT, but what do I know...

[Roland Slugg]

Yes

Dear Golden Rocket

Yes. In the later years of an asset's life its AMT depreciation adjustment becomes negative. If the sum of all assets' AMT depreciation is greater than the regular depreciation, the entry on F-6251 is a negative amount equal to that difference. This is a year-by-year calculation and entry. The difference doesn't "accumulate."