My client just got a letter from the IRS for a 2008 return asking for a copy of the AMT form 6251 when there is no possible way he could need one. This may be the start of a big headache for all of us because I believe it will affect a lot of returns, whose tax was greatly reduced by zero rate capital gains and qualified dividends.
AGI $83,717 of which $56,109 was LTCG and $18,934 was qualified dividends. Standard deduction $11,900 and 2 exemptions $7000 Taxable Income $64,818 with $0 tax because it was all qualified dividends and LTCG in the 15% bracket.
The IRS wants a form 6251, which of course was not included in such a simple e-filed return. It shows AMTI of $83,717, exemption $69,950 and income subject to AMT on line 31 of $13,767. Since it is all LTCG and QDIV, the tax is zero when you do the AMT Capital gains worksheet.
This is the first year for zero rate capital gains and qualified dividends that fall in the 15% bracket. I have a bad feeling that the IRS audit software is not prepared to deal with how this affects AMT and to the software, it looks like the taxpayer got zero tax via deductions and exemptions.
Uncompensated advice guaranteed correct or double your money back
Frank S. Duke, Jr. CPA Cincinnati, OH USA