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Schedule K-1 for Estates and Trusts: Alternative Minimum Tax

As fiduciary, you will pass through all the tax preference items to the income beneficiaries of the estate or trust on Schedule K-1, line 12, along with their income distribution.

Some of these preference items may derive solely from the trust or estate itself because of deductions not allowed in the alternative minimum tax (AMT) calculation, like state taxes or miscellaneous itemized deductions. Others may carry through from other sources, such as accelerated depreciation on rental property owned by the trust or estate.

For those not allowed in the AMT, calculate the most common AMT adjustment, the adjustment for minimum tax purposes, by subtracting the income distribution deduction (IDD) (Form 1041, Schedule B, line 15) from the IDD on a minimum tax basis (Form 1041, Schedule I, Part II, line 44).

With a single income beneficiary, the entire result goes on Schedule K-1, line 12, Code A. Allocate the total adjustment between multiple income beneficiaries based on the relative size of their distributions.

In the past, very few individual taxpayers were actually in the AMT. Now, as more taxpayers are subject to the AMT, these AMT adjustments only gain more importance.

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