Tax Facts

7905 / What items does an equipment leasing program generate which require that adjustments be made, or tax preferences added, to alternative minimum taxable income?

The investor may have the following adjustments to alternative minimum taxable income (AMTI) or tax preferences in connection with investment in an equipment leasing program that passes losses and deductions through to the investor:

(1) Passive activity losses (determined by taking into account the adjustments to AMTI and tax preferences) are not allowed in calculating AMTI.1

(2) Generally, in calculating AMTI, equipment must be depreciated using a 150 percent declining balance method switching to the straight-line method at a time to maximize the deduction over the regular recovery periods.

Property is assigned to various class lives in Revenue Procedure 88-22.2 These class lives can also be found in IRS Publication 946.

1. IRC § 58(b).

2. 1988-1 CB 785.

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