Credit for Prior Year's Minimum
Tax
If you paid Alternative Minimum Tax
(AMT) previously, or you had an eligible minimum tax credit carryforward,
you may be able to claim a tax credit on Form 8801, Credit for
Prior Year Minimum Tax - Individuals, Estates and Trusts.
The minimum tax credit is allowed for the amount of adjusted
net minimum tax for all tax years reduced by the minimum tax credit
for all prior tax years. Any unused credit may be carried forward
indefinitely as a credit against regular tax liability. It is limited,
however, to the extent that the regular tax liability reduced by other
nonrefundable credits exceeds the tentative minimum tax for the tax
year. The credit may not be used to offset any future AMT liability.
For
noncorporate taxpayers, the adjusted net minimum tax is the taxpayer’s
AMT liability reduced by the amount that would have been the taxpayer’s
AMT liability if only certain specified adjustments and preferences
had been taken into account. The adjustments include those related
to standard deduction, personal exemptions, medical and dental expenses,
miscellaneous itemized deductions, taxes, and interest expenses. The
preference items include certain depletion deductions exceeding adjusted
basis, tax-exempt interest on specified private activity bonds, and
the exclusion of gain on the sale of qualified small business stock.
This
sounds complicated because it is. Consult your tax advisor for details
on claiming the AMT credit.
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