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

(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

(2)  For cattle placed in service before 1999, more accelerated methods of depreciation were generally available for regular tax purposes than were available for alternative minimum tax purposes.