Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts

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Instructions for Form 8801

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13:48 - 20-DEC-2007

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2007

Department of the Treasury
Internal Revenue Service

Instructions for Form 8801
Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts
Section references are to the Internal Revenue Code unless
otherwise noted.

General Instructions
What’s New

• If you have any unused minimum tax credit carryforward

from 2004 or earlier years, you may qualify for a refundable
credit for part or all of that amount, even if the total amount
of your current year credit exceeds the tax liability limit. To
figure your current year refundable credit, complete Part IV
of Form 8801. Estates and trusts are not allowed to claim
this refundable credit.
• If you claimed the foreign earned income exclusion or the
housing exclusion for 2006 on Form 2555 or 2555-EZ, you
must use the Foreign Earned Income Tax Worksheet to
figure the amount to enter on line 11. See the instructions
for line 11 on page 2.

Purpose of Form
Use Form 8801 if you are an individual, estate, or trust to
figure the current year nonrefundable credit, if any, for
alternative minimum tax (AMT) you incurred in prior tax
years; to figure the current year refundable credit
(individuals only), if any, for any unused credit carryforward
from 2004; and to figure any credit carryforward to 2008.

Who Should File
Complete Form 8801 if you are an individual, estate, or trust
that for 2006 had:
• An AMT liability and adjustments or preferences other
than exclusion items,
• A minimum tax credit carryforward to 2007, or
• An unallowed qualified electric vehicle credit (see the
instructions for line 20).
File Form 8801 only if line 21 is more than zero.

Specific Instructions
The AMT is caused by two types of adjustments and
preferences — deferral items and exclusion items. Deferral
items (for example, depreciation) generally do not cause a
permanent difference in taxable income over time. Exclusion
items (for example, the standard deduction), on the other
hand, do cause a permanent difference. The minimum tax
credit is allowed only for the AMT caused by deferral items.

Part I—Net Minimum Tax on
Exclusion Items
Line 1—Estates and Trusts
Skip lines 1 through 3 of Form 8801. Complete Parts I and II
of another 2006 Form 1041, Schedule I. For Part I of
Schedule I, take into account only exclusion items (the
amounts included on lines 2 through 6, 8, and 9, and any
other adjustments related to exclusion items included on line
23 of Schedule I). On line 24 of Schedule I, use the
minimum tax credit net operating loss deduction

(MTCNOLD). However, do not limit the MTCNOLD to 90%
of the total of lines 1 through 23 of Schedule I. (See the
instructions for line 3 on this page for how to figure the
MTCNOLD.) In Part II of Schedule I, complete lines 35 and
36 without taking into account any basis adjustments arising
from deferral items. If the amount on Schedule I, line 29, is
zero or less, enter -0- on Form 8801, line 4. Otherwise,
enter on Form 8801, line 4, the amount from Schedule I, line
29, adjusted for exclusion items that were allocated to the
beneficiary.

Line 2
Enter on this line the adjustments and preferences treated
as exclusion items (except the standard deduction).
Exclusion items are only the following AMT adjustments and
preferences: itemized deductions (including any investment
interest expense reported on Schedule E), certain
tax-exempt interest, depletion, the section 1202 exclusion,
and any other adjustments related to exclusion items. Do
not include the standard deduction. It has already been
included on line 1. Combine lines 2 through 5, 7 through 9,
11, and 12 of your 2006 Form 6251. Do not include any
amount from line 14 of the 2006 Form 6251. Instead, include
the exclusion item amount from the Schedule(s) K-1 (Form
1041) you received for 2006. That amount is shown in box
12 with code J. If you included on line 26 of the 2006 Form
6251 any adjustments related to exclusion items, also
include those adjustments in the amount you enter on line 2.
Enter the total on line 2.
Exclusion items on other lines. If you included any
exclusion item on a line not listed above, include that item in
the amount you enter on line 2. For example, if depletion
was included on Form 6251 as an adjustment on line 18
(passive activities) instead of on line 9 (depletion), include it
as an exclusion item in the amount you enter on line 2.

Line 3
Your minimum tax credit net operating loss deduction
(MTCNOLD) is the total of the minimum tax credit net
operating loss (MTCNOL) carryovers and carrybacks to
2006. Your MTCNOL is figured as follows.
Your MTCNOL is the excess of the deductions (excluding
the MTCNOLD) over the income used to figure alternative
minimum taxable income (AMTI) taking into account only
exclusion items. Figure this excess with the modifications in
section 172(d) taking into account only exclusion items.
(That is, the section 172(d) modifications must be figured
separately for the MTCNOL.)
For example, the limitation of nonbusiness deductions to
the amount of nonbusiness income must be figured
separately for the MTCNOL using only nonbusiness income
and deductions but taking into account only exclusion items.
However, ignore the disallowance of the deduction for
personal exemptions under section 172(d)(3) because it has
already been taken into account to figure AMTI attributable
only to exclusion items.
To determine the amount of MTCNOL that may be
carried to tax years other than 2006, apply sections
172(b)(2) and 172(d) with appropriate modifications to take
into account only exclusion items.

Cat. No. 10600C

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Instructions for Form 8801

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($1,750 if you checked filing status box 3, 4, or 5 for 2006)
from the result.

Line 4
If your filing status was married filing separately for 2006
and line 4 is more than $200,100, you must include an
additional amount on line 4. If line 4 is $325,200 or more,
include an additional $31,275 on line 4. Otherwise, include
25% of the excess of the amount on line 4 over $200,100.
For example, if the amount on line 4 is $220,100, enter
$225,100 instead — the additional $5,000 is 25% of $20,000
($220,100 minus $200,100).

Line 12

Form 1040NR. If for 2006 you filed Form 1040NR and you
reported capital gain distributions directly on Form 1040NR,
line 14; you reported qualified dividends on Form 1040NR,
line 10b; or you had a gain on both lines 15 and 16 of
Schedule D (Form 1040), complete Part III on page 2 of
Form 8801 and enter the amount from line 48 on line 11.
Otherwise, do not complete Part III. Instead, if Form 8801,
line 10, is $175,000 or less ($87,500 or less if you checked
filing status box 3, 4, or 5 on Form 1040NR for 2006), figure
the amount to enter on line 11 by multiplying line 10 by 26%
(.26). Otherwise, figure the amount to enter on line 11 by
multiplying line 10 by 28% (.28) and subtracting $3,500

If you made an election to claim the foreign tax credit on
your 2006 Form 1040 (or Form 1040NR) without filing Form
1116, enter on Form 8801, line 12, the amount from your
2006 Form 1040, line 47 (or Form 1040NR, line 44).
Otherwise, the minimum tax foreign tax credit on exclusion
items (MTFTCE) is your 2006 AMT foreign tax credit
(AMTFTC) refigured using only exclusion items. Follow
these steps to figure your MTFTCE.
Step 1. Use a separate 2006 Form 1116 for the MTFTCE
for each separate category of income specified at the top of
Form 1116.
When applying the separate categories of income, use
the applicable AMT rate instead of the regular tax rate to
determine if any income is “high-taxed.”
Step 2. If you figured your 2006 AMTFTC using the
simplified limitation election, skip Part I and enter on the
MTFTCE Form 1116, line 16, the same amount you entered
on that line for the 2006 AMT Form 1116. Otherwise,
complete Part I using only taxable income and exclusion
items that are attributable to sources outside the United
States. If you had any 2006 foreign source qualified
dividends or foreign source capital gains (including any
foreign source capital gain distributions) or losses, use the
instructions under Step 3 to determine whether you must
make adjustments to those amounts before you include the
amounts on line 1a or line 5 of the MTFTCE Form 1116.
Step 3. Follow the instructions below, if applicable, to
determine the amount of foreign source qualified dividends,
capital gain distributions, and other capital gains and losses
to include on line 1a and line 5 of the MTFTCE Form 1116.
Foreign qualified dividends. You must adjust your
foreign source qualified dividends before you include those
amounts on line 1a of the MTFTCE Form 1116 if:
• Line 46 of Form 8801 is smaller than line 47, and
• Line 34 of Form 8801 is greater than zero.
But you do not need to make any adjustments if:
• You qualified for the adjustment exception under Qualified
Dividends and Capital Gain Tax Worksheet (Individuals),
Qualified Dividends Tax Worksheet (Estates and Trusts), or

Foreign Earned Income Tax Worksheet—Line 11

Keep for Your
Records

Line 9
If this form is for a child who was under age 18 at the end of
2006, did not file a joint return for 2006, and at least one of
the child’s parents was alive at the end of 2006, do not enter
more than the sum of the child’s 2006 earned income plus
$6,050.
A child born on January 1, 1989, is considered to be age
18 at the end of 2006 and is therefore not subject to this
limitation.

Line 10
If you filed Form 1040NR for 2006 and had a net gain on the
disposition of U.S. real property interests, line 10 cannot be
less than the smaller of that net gain or line 4.

Line 11
If for 2006 you claimed the foreign earned income exclusion
or the housing exclusion on Form 2555 or Form 2555-EZ,
you must use the worksheet below to figure the amount to
enter on line 11.

1.
2.
3.
4.
5.
6.
7.
8.

9.

10.

Enter the amount from Form 8801, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
Enter the amount from Form 8801, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Subtract line 2 from line 1. If less than zero, enter as a negative amount . . . . . . . . . . . . . . . . . . . . . . . 3.
Enter the amount from your (and your spouse’s if filing jointly) 2006 Form 2555, line 45, or
2006 Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Enter the total amount of any itemized deductions you could not claim for 2006 because
they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
Combine lines 3 and 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Tax on amount on line 7.
• If for 2006 you reported capital gain distributions directly on Form 1040, line 13; you reported
qualified dividends on Form 1040, line 9b; or you had a gain on both lines 15 and 16 of Schedule D
(Form 1040), enter the amount from line 7 of this worksheet on Form 8801, line 29. Then complete the
8.
rest of Part III of Form 8801 and enter the amount from line 48 here.
• All others: If line 7 is $175,000 or less ($87,500 or less if married filing separately for 2006), multiply
line 7 by 26% (.26). Otherwise, multiply line 7 by 28% (.28) and subtract $3,500 ($1,750 if married filing
separately for 2006) from the result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax on amount on line 6. If line 6 is $175,000 or less ($87,500 or less if married filing separately for 2006), multiply
line 6 by 26% (.26). Otherwise, multiply line 6 by 28% (.28) and subtract $3,500 ($1,750 if married filing separately
for 2006) from the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Subtract line 9 from line 8. Enter here and on Form 8801, line 11. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . 10.

}

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Instructions for Form 8801

13:48 - 20-DEC-2007

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Adjustments to foreign qualified dividends under Schedule D
Filers, whichever applies, in the Form 1116 instructions
when you completed your regular tax Form 1116 (or you
would have qualified for that adjustment exception if you had
completed a regular tax Form 1116) for 2006, and
• Line 34 of Form 8801 is not more than $175,000 ($87,500
if married filing separately for 2006).
To adjust your foreign source qualified dividends, multiply
your foreign source qualified dividends in each separate
category by 0.5357. Include the results on line 1a of the
applicable MTFTCE Form 1116. But do not adjust the
amount of any foreign source qualified dividend you elected
to include on line 4g of Form 4952.
Individuals with capital gain distributions only. If you
had no 2006 capital gains or losses other than capital gain
distributions from box 2a of Form(s) 1099-DIV or substitute
statement(s), you must adjust your foreign source capital
gain distributions before you include those amounts on line
1a of the MTFTCE Form 1116 if you are required to adjust
your foreign source qualified dividends under the rules just
described or you would be required to adjust your foreign
source qualified dividends if you had any.
To adjust your foreign source capital gain distributions,
multiply your foreign source capital gain distributions in each
separate category by 0.5357. Include the results on line 1a
of the applicable MTFTCE Form 1116. But do not adjust the
amount of any foreign source capital gain distribution you
elected to include on line 4g of Form 4952.
Other capital gains or losses. Use Worksheet A in the
instructions for the 2006 Form 1116 to determine the
adjustments you must make to your foreign source capital
gains or losses if you have foreign source capital gains or
losses in no more than two separate categories and any of
the following apply.
• You figured your 2006 tax using the Qualified Dividends
and Capital Gain Tax Worksheet in the Form 1040 (or Form
1040NR) instructions and line 3 of that worksheet minus the
amount on line 4e of Form 4952 that you elected to include
on line 4g of Form 4952 is zero or less.
• Line 15 or 16 of your 2006 Schedule D (Form 1040) (line
14a or 15 of Schedule D (Form 1041)) is zero or a loss.
• You figured your 2006 tax using Schedule D (Form 1041)
and line 18 of Schedule D minus the amount on line 4e of
Form 4952 that you elected to include on line 4g of Form
4952 is zero or less.
• You figured your 2006 tax using the Schedule D Tax
Worksheet in the Schedule D (Form 1040) instructions or in
the Form 1041 instructions and line 9 of that worksheet is
zero or a loss.
• You were not required to make adjustments to your
foreign source qualified dividends under the rules described
above (or you would not have been required to make those
adjustments if you had foreign source qualified dividends).
Use Worksheet B if you:
• Cannot use Worksheet A,
• Had 2006 foreign source capital gains and losses in no
more than two separate categories, and
• Did not have any item of unrecaptured section 1250 gain
or 28% rate gain or loss.
Instructions for Worksheets A and B. When you
complete Worksheet A or Worksheet B, do not use any
foreign source capital gains you elected to include on line 4g
of Form 4952. Use 0.5357 instead of 0.4286 to complete
lines 11, 13, and 15 of Worksheet B and to complete lines 8,
11, and 17 of the Line 15 Worksheet for Worksheet B.
If you do not qualify to use Worksheet A or Worksheet B,
use the instructions for Capital Gains and Losses in Pub.
514 to determine the adjustments you make.
Step 4. Complete lines 9 through 13 of the MTFTCE Form
1116. For line 9, use the same amount you entered on that

line for 2006 for the regular tax. Use your MTFTCE
carryover, if any, on line 10.
Step 5. If you did not figure your 2006 AMTFTC using the
simplified limitation election, complete lines 14 through 16 of
the MTFTCE Form 1116.
Step 6. If you did not complete Part III of Form 8801, enter
the amount from Form 8801, line 4, on line 17 of the
MTFTCE Form 1116 and go to Step 7. If you completed Part
III of Form 8801, you must complete, for the MTFTCE, the
Worksheet for Line 17 in the Form 1116 instructions to
determine the amount to enter on line 17 of the MTFTCE
Form 1116 if:
• Line 46 of Form 8801 is smaller than line 47, and
• Line 34 of Form 8801 is greater than zero.
But you do not need to complete the Worksheet for Line
17 if:
• You qualified for the adjustment exception under Qualified
Dividends and Capital Gain Tax Worksheet (Individuals),
Qualified Dividends Tax Worksheet (Estates and Trusts), or
Adjustments to foreign qualified dividends under Schedule D
Filers, whichever applies, in the Form 1116 instructions
when you completed your regular tax Form 1116 (or you
would have qualified for that adjustment exception if you had
completed a regular tax Form 1116) for 2006, and
• Line 34 of Form 8801 is not more than $175,000 ($87,500
if married filing separately for 2006).
If you do not need to complete the Worksheet for Line 17,
enter the amount from line 4 of Form 8801 on line 17 of the
MTFTCE Form 1116.
Instructions for MTFTCE Worksheet for Line 17.
Follow these steps to complete, for the MTFTCE, the
Worksheet for Line 17 in the Form 1116 instructions.
1. Enter the amount from Form 8801, line 4, on line 1 of
the worksheet.
2. Skip lines 2 and 3 of the worksheet.
3. Enter the amount from Form 8801, line 44, on line 4 of
the worksheet.
4. Multiply line 4 of the worksheet by 0.1071 (instead of
0.2857). Enter the result on line 5 of the worksheet.
5. Enter the amount from Form 8801, line 42, on line 6 of
the worksheet.
6. Multiply line 6 of the worksheet by 0.4643 (instead of
0.5714). Enter the result on line 7 of the worksheet.
7. Complete lines 8 and 9 of the worksheet as instructed
on the worksheet.
Step 7. Enter the amount from Form 8801, line 11, on the
MTFTCE Form 1116, line 19. Complete lines 18, 20, and 21
of the MTFTCE Form 1116.
Step 8. Complete Part IV of the first MTFTCE Form 1116
only. Enter the amount from that MTFTCE Form 1116, line
33, on Form 8801, line 12.
Step 9. Keep all Forms 1116 you used to figure your
MTFTCE, but do not attach them to your tax return.
If line 13 of the MTFTCE Form 1116 is greater than line
20 of the MTFTCE Form 1116, keep a record of the
difference. This amount is carried forward and used to figure
your MTFTCE next year.

Part II—Current Year Nonrefundable
and Refundable Credits and
Carryforward to 2008
Line 20
Enter any qualified electric vehicle credit not allowed for
2006 solely because of the limitation under section
30(b)(3)(B).

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Page 4 of 4

Instructions for Form 8801

13:48 - 20-DEC-2007

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Line 21

Line 47

If line 21 is zero or less, you do not have a nonrefundable or
refundable credit or a credit carryforward. Do not complete
the rest of this form and do not file it.

If for 2006 you filed Form 1040NR and Form 8801, line 29,
is $175,000 or less ($87,500 or less if you checked filing
status box 3, 4, or 5 on Form 1040NR for 2006), multiply line
29 by 26% (.26). Otherwise, multiply line 29 by 28% (.28)
and subtract $3,500 ($1,750 if you checked filing status box
3, 4, or 5 on Form 1040NR for 2006) from the result.

Line 22
Follow the instructions below and refer to your 2007 income
tax return to figure the amount to enter on line 22.
Form 1040. Subtract from the amount on line 44 the total
of any credits on lines 47 through 55 (not including any
credit for prior year minimum tax, clean renewable energy
bond credit, and credit for Gulf tax credit bonds). If the result
is zero or less, enter -0-.
Form 1040NR. Subtract from the amount on line 41 the
total of any credits on lines 44 through 50 (not including any
credit for prior year minimum tax, clean renewable energy
bond credit, and credit for Gulf tax credit bonds). If the result
is zero or less, enter -0-.
Form 1041, Schedule G. Subtract the total of any credits
on lines 2a through 2c from the sum of lines 1a and 1b. If
the result is zero or less, enter -0-.

Line 48
If for 2006 you filed Form 2555 or Form 2555-EZ, do not
enter the amount from Form 8801, line 48, on Form 8801,
line 11. Instead, enter the amount from Form 8801, line 48,
on line 8 of the worksheet on page 2. Then complete the
rest of that worksheet to figure the amount to enter on Form
8801, line 11.

Part IV—Tentative Refundable Credit
Line 56
If you are filing Form 2555, Form 2555-EZ, or Form 4563, or
you are excluding income from sources within Puerto Rico,
you must refigure your adjusted gross income (Form 1040,
line 38) by adding back any foreign earned income and
housing exclusion (Form 2555, line 45, or Form 2555-EZ,
line 18), foreign housing deduction (Form 2555, line 50),
income from American Samoa that you are excluding (Form
4563, line 15), and income from Puerto Rico that you are
excluding. Enter the result on line 56.

Part III—Tax Computation Using
Maximum Capital Gains Rates
If your 2006 taxable income was zero or less, complete lines
2 through 6 of the 2006 Qualified Dividends and Capital
Gain Tax Worksheet, lines 18 through 22 of the 2006
Schedule D (Form 1041), or lines 2 through 13 of the 2006
Schedule D Tax Worksheet, whichever applies, before
completing Part III.
Form 1040NR. If you figured your 2006 tax using the
Qualified Dividends and Capital Gain Tax Worksheet in the
Form 1040NR instructions, enter the amount from line 4 of
that worksheet on Form 8801, lines 30 and 32; skip Form
8801, line 31; and enter on Form 8801, line 37, the amount
from line 5 of that worksheet.
Estates and trusts. If you figured your 2006 tax using the
Qualified Dividends Tax Worksheet in the Form 1041
instructions, enter the amount from line 4 of that worksheet
on Form 8801, lines 30 and 32; skip Form 8801, line 31; and
enter on Form 8801, line 37, the amount from line 5 of that
worksheet.

Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the right
amount of tax.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in
the administration of any Internal Revenue law. Generally,
tax returns and return information are confidential, as
required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for individual taxpayers filing this form is approved
under OMB control number 1545-0074 and is included in the
estimates shown in the instructions for their individual
income tax return. The estimated burden for all other
taxpayers who file this form is shown below.

Line 35
If for 2006 you filed Form 1040NR and Form 8801, line 34,
is $175,000 or less ($87,500 or less if you checked filing
status box 3, 4, or 5 on Form 1040NR for 2006), multiply line
34 by 26% (.26). Otherwise, multiply line 34 by 28% (.28)
and subtract $3,500 ($1,750 if you checked filing status box
3, 4, or 5 on Form 1040NR for 2006) from the result.

Recordkeeping . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . .
Preparing the form . . . . . . . . . . . . . . . .
Copying, assembling, and sending the
form to the IRS . . . . . . . . . . . . . . . . .

Line 36
If for 2006 you filed Form 1040NR, enter $30,650 ($61,300
if you checked filing status box 6 on Form 1040NR for
2006).

.
.
.

2 hr., 4
1 hr., 57
2 hr., 3
48

min.
min.
min.
min.

.

If you have comments concerning the accuracy of these
time estimates or suggestions for making this form simpler,
we would be happy to hear from you. See the instructions
for the tax return with which this form is filed.

Line 37
If for 2006 you filed Form 1040NR, enter on Form 8801, line
37, the amount from line 5 of your 2006 Qualified Dividends
and Capital Gain Tax Worksheet in the instructions for Form
1040NR, line 41, or the amount from line 14 of your 2006
Schedule D Tax Worksheet on page D-10 of the 2006
Instructions for Schedule D (Form 1040), whichever applies.
If you did not complete either worksheet, enter -0-.

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