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AMT and Depreciation
Client's AGI is the same as 2018 ($73k), filing status changed from HOH to Single but the AMT adjustment reduced Depreciation almost 500% what it was in 2018. What would cause this to happen?
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@hananb21 wrote:This is the 4th year of a 5 year life. previous 3 years went perfectly with proper accumulated depreciation. Proseries adjusted current year Depreciation $459 for AMT in 2018. This year it made a reduction of $1,767 for AMT. Doesn't make sense. Since nothing changed from last 2018.
That sounds right. 🙂
AMT depreciation uses 150%DB. Your regular depreciation uses 200%DB. Those adjusted amounts are the difference for each year. Because of the different schedule of depreciation, the adjustment will be different each year.
So let's say you have a Dump Truck with a Basis of $34,000. These are the depreciation amounts for each year:
| 200%DB (Regular Depreciation) | 150%DB (AMT Depreciation) | Difference (AMT Adjustment) | |
| Year 1 | $6800 | $5100 | -$1700 |
| Year 2 | $10,880 | $8670 | -$2210 |
| Year 3 | $6528 | $6069 | +$459 |
| Year 4 | $3917 | $5664 | +$1757 |
| Year 5 | $3917 | $5664 | +$1757 |
| Year 6 | $1958 | $2832 | +$874 |
Does that help?
And if the taxpayer isn't subject to AMT, it doesn't matter. So if there isn't anything on Line 1 of Schedule 2, the taxpayer is not subject to AMT and those adjustments don't do anything.
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