Unexplained AMT adjustment/preference for Rental Property depreciation

[constantine-vainstein]

I have a foreign rental property in service since 1/1/2022. Its price is 399,788, not including the land. I take 30 years as recovery period. In this case the depreciation should be 12,726. However, TurboTax adds an AMT adjustment/preference of $-19 in line 14 of Schedule E asset worksheet, and the resulting depreciation is 12,707. How can it be explained?

[DaveF1006]

Turbo Tax is applying an Alternative Minimum Tax (AMT) adjustment to your foreign rental property depreciation. This happens because AMT rules often require a different depreciation method than regular tax calculations. Specifically, AMT depreciation tends to use a longer recovery period or a different calculation method, which can result in slight differences in depreciation amounts2.

In your case, the $-19 adjustment suggests that TurboTax is making a minor correction based on AMT rules. This adjustment is not an additional tax but rather a recalibration of depreciation for AMT purposes. The IRS requires taxpayers to calculate both regular tax depreciation and AMT depreciation, and you pay whichever results in a higher tax liability.

If you want to verify or adjust this, you can:

• Check Form 6251 in your return to see how AMT is affecting your tax calculations.
• Review the asset entry in TurboTax to ensure the correct depreciation method is selected.