7914 / What adjustments and tax preference items are generated by a cattle breeding program for purposes of the alternative minimum tax?

Editor’s Note: The 2017 tax reform legislation eliminated the corporate AMT for tax years beginning after 2017.

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

(1) Losses from tax shelter farm activities (determined by taking into account the adjustments to AMTI and tax preferences) are not allowed in calculating AMTI, except to the extent the taxpayer is insolvent or upon disposition of the tax shelter farm activity.

“Tax shelter farm activities” are any farm activities involving any enterprise, other than a C corporation, if (1) the farm activity is a passive activity (see Q 8011); (2) at any time interests in the enterprise have been offered for sale in an offering required to be registered with any federal or state securities agency; or (3) the enterprise allocates more than 35 percent of its losses during any period to investors who do not actively take part in the management of the operation.¹