Getting hit with Alternative Minimum Tax due to sales of properties--Should I not take any bonus or 179 depreciations?

[SpokaneLandlord]

I am getting hit with about $20k Alternative Minimum Tax (AMT) for the year 2020 due to sale of a lot of rental income property (sold a lot expecting capital gains taxes to increase).   We will not get hit with AMT in 2021 or future years as we do not plan on selling such large amounts of property.

Since we are getting hit with AMT, is it a bad idea to take 179 depreciation or bonus depreciation on new purchases of assets for the remaining properties?  If we take bonus depreciation, are we really getting it or is the AMT wiping it out?  I know we can see what our total taxes will be for 2020 by trying different scenarios but I'm wondering if we would be getting a small benefit in 2020 and giving up the rest of the bonus depreciation that we otherwise could have spread out over the next several years?  Or, if the AMT is higher than the bonus depreciation, is there a carryover of the portion of the bonus depreciation that we were not able to use due to the Alternative Minimum Tax?

We already changed from the standard deduction to itemized deductions and our taxes went down despite the itemized amounts being lower than the standard deduction. 

Any other ideas for how to reduce AMT after the fact for landlords?  It is too late for Opportunity Zones or 1031 exchanges.

[ColeenD3 · Accepted solution]

Look at your Form 6251 Line 2l and see how much of the AMT is allocated to depreciation. You can play around with figures to find a sweet spot between AMT and Section 179. Back off the full amount and try different amounts to get the best result.

Form 6251

[SpokaneLandlord]

Awesome, thank you. 

So my goal is to maximize 179 deductions while line 21 of Form 6251 stays at zero, correct?

[ColeenD3]

Yes. That is the goal.