6251 HELP!

[JANIE GILMORE]

I hope someone can help me understand the 6251. My client is older and has only investment income plus $25,000 IRA disbursed. Her husband died in 2006 and she sold some stock in 2007 that threw her into AMT tax. On the 6251 her total income including the $25,000 on line 1 is $107.573. On line 26 the $25,000 was added in again making the total on line 28 $132,573. This form arrived at an AMT tax of $2,934 to be added to her regular tax of $15,776. Doesn't seem right to me, it looks like she is taxed twice on the $25,000.

Any help you can give me to understand this would be appreciated.

Janie

[TaxmannEA]

You need to go over the 6251 and it's instructions manually. Line 26 is for adjustments to the IRA distribution for AMT. You shouldn't have the gross entered on that line. A lot of software has problems with this forn.

[JANIE GILMORE]

Thanks for your confirmation. I did delete the duplicated amount and now they don't even owe AMT.

I am so pleased to find this board, it is much needed.

Janie

[LisaAnn]

You need to go over the 6251 and it's instructions manually. Line 26 is for adjustments to the IRA distribution for AMT. You shouldn't have the gross entered on that line. A lot of software has problems with this forn.

Hi,

I have read the original post and was having the same problem with IRA Distributions when a client was in AMT. I was entering the total amount distributed from the IRA and I see that is not the proper entry.

Can anyone give me an example of what would constitute an adjustment to the IRA distribution for AMT that would need to be entered on Line 26 of Form 6251? I have research AMT and read the instructions to 6251 and have not found an answer yet.

Thank you.

[jklcpa]

Any yr that taxpayer was subject to AMT, the deductions are computed using regular tax rules and then again using AMT rules. It's possible that the IRA deduction in a prior year is different using AMT than for reg tax. In that case, the taxpayer could have basis in the IRA for AMT that differs from basis, if any, for reg tax. Then, when the taxpayer receives a distribution, the taxable portion of the IRA distribution for AMT will not be the same as the taxable portion for reg tax. The difference would be entered on 6251, line 26.

Same goes for other items affected by income limitations.

[LisaAnn]

Thank you, jklcpa.

Your explanation is very clear and to the point.

I haven't had to deal with AMT issues very often, so I appreciate the help.

Lisa