How to Calculate AMT Depreciations

How to Calculate AMT Depreciations
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Tip

Consult a tax professional if you are having trouble determining whether you are required to calculate the alternative minimum tax.

The Alternative Minimum Tax (AMT) is designed to ensure no one exploits special tax benefits or deductions to pay too little tax. Not everyone is subject to the AMT. For those who are, the calculation of depreciation must be revisited. All accelerated depreciation in excess of straight-line depreciation is subject to the AMT.

Step 1

Fill out the Form 1040 worksheet to see if you it directs you to complete Form 6251 - Line 45 in the AMT section of the Form 1040 instructions. This will determine whether you are subject to AMT. The IRS also provides an AMT Assistant on their website to help identify the need for AMT.

Step 2

Identify the method of depreciation used. If you are using the straight-line method of depreciation, none of your depreciation is subject to the AMT.

Step 3

Recalculate depreciation for the tax year using the straight-line method. The straight-line method of depreciation spreads the cost of the asset, less the residual value of the asset, evenly across each period of the useful life of the asset.

Step 4

Subtract the depreciation calculated using the straight-line method from the depreciation calculated using any other method. This is the amount of depreciation subject to the AMT.

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