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Including Individual CA Schedule P AMT adjustments in Lacerte

by Lacerte Tax 2023 Updated 11 months ago

This article explains how to report Alternative Minimum Tax adjustments and whether a taxpayer qualifies for the Alternative Minimum Taxable Income (AMTI) Exclusion on California Schedule P.

See CA Instructions for Schedule P

  • There may be differences in the AMT calculation for items like depreciation.
    • For example, preference items like depreciation differences aren't included in AMT-related calculations such as on Form 3801.
  • Schedule P includes an exclusion for such items.

A qualified taxpayer must exclude income, positive and negative adjustments, and preference items attributable to any trade or business when figuring AMTI.

  • These adjustments and preference items must also be excluded when calculating any deductions that may result in AMT carryovers.
  • Item G in the Schedule P instructions explains the AMTI exclusion and who qualifies.

You are a qualified taxpayer if you meet both of the following:

  1. Own or have an ownership interest in a trade or business.
  2. Have aggregate gross receipts (less returns and allowances), during the taxable year of less than $1,000,000 from all trades or businesses for which you are the owner or have an ownership interest.
    1. Gross receipts may include, but aren't limited to, items reported on the following 1040-associated forms:
      1. Schedule C, Profit or Loss from Business
      2. Schedule D, Capital Gains and Losses
      3. Schedule E, Supplemental Income and Loss (other than income from a trust)
      4. Schedule F, Profit or Loss from Farming
      5. Federal Form 4797, Sales of Business Property (figured in accordance with California law)
      6. California Schedule D-1, Sales of Business Property, (if required to complete it) that are associated with a trade or business.
    2. In the case of an ownership interest, you include only the proportional share of gross receipts of any trade or business from a partnership, S corporation, regulated investment company (RIC), a real estate investment trust (REIT), or real estate mortgage investment conduit (REMIC) in accordance with your ownership interest in the enterprise.
    3. Apply the $1,000,000 test to the return regardless of filing status. The threshold doesn't become $2,000,000 for married/RDP taxpayers filing jointly.

Making an adjustment in Screen 40, Alternative Minimum Tax (6251) for the state of California will result in diagnostic ref. #1129. The diagnostic is a reminder that the program calculates AMT based on reported gross receipts and that any manual adjustment entries may be inappropriate.

Lacerte Tax

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