I've been dealing with AMT issues for the past few years and wanted to share what I've learned about charitable donations and AMT calculations. The most important thing to understand is that charitable donations are NOT added back to your income for AMT purposes - this is a huge relief compared to other itemized deductions like state and local taxes which do get added back. Here's how different donation types work with AMT: **Cash donations**: No difference between regular tax and AMT treatment. You get the full deduction in both calculations. **Appreciated stock donations**: These are actually MORE beneficial under AMT because you avoid capital gains tax on the appreciation while still getting the full fair market value deduction. This is especially valuable if you're already in AMT territory. **Property donations**: Generally follow the same rules as regular tax, but make sure you have proper documentation and appraisals since AMT scrutiny can be higher. One strategy that's helped me is timing my donations strategically. Since AMT often hits in high-income years, I try to accelerate charitable giving in those years to maximize the tax benefit when other deductions are being limited. Also, keep in mind the AGI limits still apply (60% for cash, 30% for appreciated assets), and any excess can be carried forward for up to 5 years under both regular tax and AMT systems. Hope this helps clarify things for you!

This is such a timely question! I just went through this exact situation during my 2024 tax prep. Like many others have mentioned, charitable donations are NOT added back for AMT - which was a huge relief when I discovered this. What really helped me understand the mechanics was creating a simple spreadsheet to track my regular tax vs AMT calculations side by side. I could see exactly how my $15,000 in cash donations and $8,000 in appreciated stock donations affected both calculations. The stock donation strategy mentioned by others is spot-on. I donated some Tesla shares that had appreciated significantly, and not only did I get the full market value deduction, but I also avoided about $2,400 in capital gains tax that would have applied under both regular and AMT systems. One thing I learned the hard way: if you're planning multiple donation types in the same year, consider the timing carefully. I made a large cash donation in January and then realized later I could have been more strategic about when to donate my appreciated securities to optimize the overall tax impact. For anyone still confused about this, I'd recommend using tax software that shows both calculations clearly, or better yet, run some scenarios with a tax professional. The peace of mind is worth it when you're dealing with AMT complexity!

I just went through this exact same struggle last month! What finally worked for me was calling the IRS at 7:00 AM sharp (they open at 7 AM in most time zones) and immediately pressing 2 for personal income tax, then 1 for form/tax history, then 3 for all other questions. This seems to bypass some of the busier queues. Also, I discovered that if you call on a Friday afternoon around 3-4 PM, the wait times are surprisingly shorter - I think most people assume it's busy then but it's actually one of the better times. Keep your tax return and any IRS letters handy when you call, and don't give up! It took me 6 attempts over 3 days but I finally got through. The actual agent was super helpful once I reached them. Good luck!

I've been dealing with IRS phone issues for months and finally found a strategy that works! Try calling (877) 777-4778 (the general taxpayer line) at exactly 7:15 AM on weekdays - not 7:00 AM when everyone else calls, but 15 minutes later when the initial rush dies down. When you get through the menu, press 1 for English, then 2 for personal income tax questions, then 1 for balance due inquiries (even if that's not your exact issue - it routes to the same agents but has shorter wait times). I also recommend downloading a call recording app so you can document any reference numbers or instructions they give you. Last tip: if you get disconnected, call back immediately using the same menu sequence - they sometimes have a "recent caller" priority that puts you back in a better queue position. This approach got me through in under 45 minutes last week after weeks of failed attempts. Don't give up!

Great question about farm building tax write-offs! Since you're replacing an old structure with a new one dedicated 100% to business use, you're in a good position tax-wise. For the demolition costs, these typically get added to your land basis rather than being immediately deductible. However, the construction costs for your new butchering facility can be depreciated over 20 years as farm property, or you might qualify for bonus depreciation (80% in 2025) or Section 179 expensing for immediate deduction. One thing to watch out for - if you've been depreciating the old barn, you'll likely face depreciation recapture when you demolish it. This means you'll owe taxes on the depreciation you previously claimed. Plan for this so it doesn't surprise you at tax time. Make sure to separate different components of your project. Specialized butchering equipment, processing tables, and refrigeration systems might qualify as 7-year property with faster depreciation than the building structure itself. Also check if your state offers agricultural exemptions on construction materials - could save you significant sales tax. Keep detailed records of everything and consider consulting with a tax professional who specializes in agricultural operations before you start construction.

One thing I haven't seen mentioned yet is the potential for cost segregation studies on your new butchering facility. Since this is a specialized agricultural building with specific equipment and systems for poultry processing, a cost segregation analysis could identify components that qualify for accelerated depreciation. For example, your electrical systems for refrigeration, specialized lighting, ventilation systems, and processing equipment might be classified as 5-7 year property instead of the standard 20-year building depreciation. This could significantly increase your immediate tax deductions, especially combined with bonus depreciation. The cost segregation study typically costs a few thousand dollars but can often save tens of thousands in taxes by properly classifying building components. Given that you're doing a complete rebuild specifically for business use, this might be worth exploring with a tax professional who specializes in agricultural operations. Also, don't forget to document the business necessity for the demolition and rebuild. Photos of the old barn's condition and records showing why renovation wasn't feasible can help support your tax positions if the IRS ever questions the timing or necessity of the project.

This discussion has been incredibly helpful! I'm dealing with a similar situation with my freelance business and wanted to share what I learned from my CPA about this exact issue. The key insight that finally made it click for me is that the IRS views prepayment as immediately creating an asset - the "right" to receive services or use property. This right has value from the moment you pay for it, which is why the benefit period starts then rather than when you actually use the service. I had prepaid some web hosting and business software licenses totaling about $4,500 in November 2023 for services running through various dates in 2024. My CPA confirmed that since all the service periods end within 12 months of payment (and within 2024), I can deduct the full amount in 2023. What really helped me organize this was creating a simple tracking sheet with columns for: Payment Date, Service Period Start, Service Period End, 12-Month Rule Date, and "Following Tax Year" End Date. Then I can easily see which prepaid expenses qualify for immediate deduction versus those that need to be capitalized. For anyone still confused about this rule, I'd recommend talking through a few specific examples with a tax professional. Once you see how it applies to your actual business expenses, the concept becomes much clearer than trying to understand it in the abstract.

This entire discussion has been incredibly valuable! As someone who's been struggling with prepaid expense timing for my small business, I finally feel like I understand the 12-month rule properly. The key breakthrough for me was realizing that the "benefit" isn't the actual use of the service, but rather securing the RIGHT to that service at the agreed terms. It's like the difference between having a reservation at a restaurant versus actually eating the meal - the value of the reservation exists from the moment you make it. I've been overly conservative with my prepaid expenses, spreading them across multiple years when I could have been deducting them immediately under the 12-month rule. This could have saved me significant cash flow issues during my startup phase. One practical tip I'd add: I now negotiate payment terms with vendors to maximize the 12-month rule benefits. For example, instead of paying in January for services starting immediately, I sometimes pay in December for the same January start date. This lets me deduct in the earlier tax year while still getting the same services. The tracking spreadsheet idea mentioned earlier is something I'm definitely implementing. Having a clear visual of payment dates, benefit periods, and the 12-month windows will make tax prep so much smoother and help ensure I'm taking advantage of this rule properly going forward. Thanks everyone for sharing your experiences and explanations - this community really helps demystify these complex tax concepts!

One additional resource that might be helpful is IRS Revenue Ruling 87-9, which specifically addresses the treatment of suspended passive losses when a rental property is sold. This ruling clarifies that the suspended losses become fully deductible against all income (not just passive income) in the year you dispose of your entire interest. Also, don't overlook the potential impact of the Net Investment Income Tax (NIIT) if your modified adjusted gross income exceeds certain thresholds ($200K single, $250K married filing jointly). The 3.8% NIIT could apply to your net gain after the passive losses are applied, so factor that into your tax planning. Make sure you keep detailed records of the calculation for your files. The IRS likes to see clear documentation of how suspended passive losses were computed and applied, especially on larger transactions like yours. Consider creating a simple spreadsheet showing the year-by-year accumulation of your $130K in suspended losses - it'll be invaluable if you ever get audited.

Drew, you're absolutely correct in your calculation. The $130K in suspended passive losses will indeed offset the $145K depreciation recapture, leaving you with about $15K in taxable gain. This is a straightforward application of IRC Section 469(g)(1). For the official IRS documentation you're seeking, here are the key resources: 1. **IRC Section 469(g)(1)(A)** - This is the primary code section governing disposition of passive activities 2. **IRS Publication 925** - "Passive Activity and At-Risk Rules" (pages 18-20 specifically cover disposition rules) 3. **IRS Publication 527** - "Residential Rental Property" 4. **Revenue Ruling 87-9** - Addresses suspended passive losses upon property sale The process works exactly as you described: when you dispose of your entire interest in the rental property, all suspended passive losses become fully deductible against any income in that tax year, including depreciation recapture income. You'll need to file Form 4797 (Sale of Business Property), Form 8582 (to release the suspended losses), and possibly Schedule D. The $15K remaining gain will likely be subject to the 25% depreciation recapture rate. One important note: verify that your $130K figure matches the suspended losses shown on line 16 of your most recent Form 8582. This ensures everything aligns properly when you file.