same thing as last year for me...despite small number in box 1, there are large positive numbers in box 17 which is fully taxable under the AMT calculation. Entering box 17 increases my tax due quite a bit. Weird that entering depletion numbers increases your tax.
The only way this makes sense is that box 1 is already adjusted to remove the depletion, so that when you enter the box 17 amounts, it adds the depletion back in. Depletion is not allowed as a deduction under AMT.
Is jrad still around? He's the one who knows this stuff best.
You're right. For all natural resource companies except oil & gas, the deduction for depletion is built into line 1.
Coal companies get to deduct an artificial 10% of their gross receipts as percentage depletion. After a while, this deduction starts to exceed the company's cost of its mines. The excess deduction is an AMT adjustment. So for people in the AMT, it's a wash (deduction on line 1, addback on line 17). For people not in the AMT, it's a deduction. This actually makes sense. ARLP has about the highest distribution coverage of any MLP. It makes a lot more money than it distributes. So you would think the tax shelter would be low.
I think you also own BBEP. Oil & gas depletion is different. First, they allow a higher percentage depletion deduction 14% or 15%, but they only want to give the deduction to small producers. So partnerships are required to pass their oil & gas depletion on to us as a separate line item (buried on line 20, usually) so that you and I (who certainly qualify as small producers) can qualify for percentage depletion. But if you qualify, no AMT preference for oil & gas percentage depletion.
So the net result is, if you're in the AMT, you don't get a current deduction for coal percentage depletion, but you do get a deduction for oil & gas percentage depletion.
And your AMT tax basis for ARLP will be higher than it is for regular tax purposes, so your AMT gain will be smaller when you sell. And at least my software treats the line 17 amount as a temporary difference (under the passive loss category) so that I get a tax credit carryover for the AMT related to the line 17 amounts. I can't see how that's right for the depletion, but that's what the software does.