What Is AMT Depreciation Allowed/Allowable and How to Calculate It

On a depreciation worksheet, the “AMT Dep Allowed/Allowable” field is the depreciation deduction that federal law says you either claimed or were entitled to claim on an asset under the Alternative Minimum Tax rules, and the AMT depreciation allowed or allowable figure reduces your AMT basis by whichever of those two numbers is larger. The “allowed” piece is what you actually deducted on a prior return. The “allowable” piece is what the tax code entitled you to deduct that year, whether you claimed it or not. Your AMT basis drops by the greater of the two, even if you never took the deduction.¹

That rule exists to stop taxpayers from skipping depreciation in low-rate years and hoarding it for higher-rate years. If you were entitled to $5,000 of AMT depreciation and claimed nothing, your AMT basis still falls by $5,000. The deduction is gone, but the basis reduction stays. The same greater-of rule applies to regular tax depreciation, which is why most depreciable assets carry two separate running basis figures, one for each system.

Why AMT Depreciation Is a Separate Number in the First Place

Regular tax depreciation for most tangible business property uses MACRS with the 200% declining balance method, which loads deductions into the early years of ownership.¹ For property that requires an AMT adjustment, the law substitutes the 150% declining balance method, which spreads the same total deduction more evenly across the recovery period.²

Total lifetime depreciation is identical under both methods. Only the timing differs. Early years produce a larger regular tax deduction and a smaller AMT deduction; later years flip. That gap is what the “AMT Dep” field on your worksheet is tracking year by year.

Which Assets Actually Need an AMT Depreciation Figure

For a lot of taxpayers filing today, the AMT depreciation column ends up matching the regular tax column, and no adjustment is required. The Form 6251 instructions list the property that still needs a refigured AMT number:³

Post-1998 personal property depreciated with 200% declining balance (typically 3-, 5-, 7-, and 10-year MACRS property that didn’t take bonus depreciation)
Post-1998 Section 1250 real property depreciated under an accelerated method
Any tangible property placed in service after 1986 and before 1999

The list of property that does not need a separate AMT depreciation calculation is longer and covers most modern assets:³

Property that took bonus depreciation, because the depreciable basis is the same under both systems
Property placed in service after 2015, even if you elected out of bonus depreciation
Residential rental property placed in service after 1998
Post-1998 nonresidential real property using straight-line depreciation for regular tax
Any property for which you elected the Alternative Depreciation System (ADS) for regular tax
Any property already using 150% declining balance or straight-line for regular tax

The One, Big, Beautiful Bill made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025.⁴ When the full cost gets deducted in year one under both systems, there is no timing difference to track. Section 179 works the same way: the deduction reduces basis identically for regular tax and AMT, so it doesn’t create an entry on the post-1986 depreciation line of Form 6251.⁵

If every asset on your depreciation schedule either took bonus depreciation or already uses straight-line, your AMT depreciation column mirrors the regular tax column and the adjustment line on Form 6251 is zero. The field still needs to be populated correctly, because it feeds AMT basis for the eventual sale.

Calculating the Current-Year AMT Depreciation Deduction

For property that does require the separate calculation, you run the depreciation schedule twice. Once with the regular tax method (usually 200% declining balance) and once with the AMT method (usually 150% declining balance), using the same placed-in-service date, same cost basis, same convention, and same recovery period unless the AMT recovery period differs.

Each year, the “allowable” AMT depreciation for the asset is the deduction the AMT schedule produces for that year. The “allowed” figure is what actually got deducted on the prior AMT calculation. The larger of the two reduces AMT basis. In practice, if you have been tracking AMT depreciation each year, allowed and allowable are the same number and the distinction never matters. It matters when you skipped the AMT computation in a prior year and now have to reconstruct it.

The adjustment reported on Form 6251 is the regular tax depreciation for the year minus the AMT depreciation for the year, summed across all applicable assets. Early in an asset’s life this is positive and adds to AMTI. Later in the asset’s life the sign flips and reduces AMTI, entered on the form as a negative number.⁵ Over the full recovery period the positive and negative adjustments net to zero. Nothing is permanently lost; the timing simply shifts.

Why the AMT Basis Matters When You Sell

Because regular tax and AMT depreciation accumulate at different rates, the same asset ends up with two different adjusted basis figures at sale. Regular tax basis will typically be lower (more depreciation taken faster), producing a larger regular tax gain. AMT basis will be higher, producing a smaller AMT gain. That difference is a separate disposition adjustment on Form 6251, line 2k, and you refigure the sale on a separate Form 8949 using AMT basis to get the correct number.⁶

This is the practical reason the “AMT Dep Allowed/Allowable” field matters even in years when the annual adjustment is small. If you sell an asset years later and never tracked AMT basis, you have to reconstruct it from every prior year’s depreciation tables. That’s the moment most people wish they had populated the field correctly all along.

What to Do If You Never Tracked AMT Depreciation

If the field on your worksheet is blank or wrong for a prior year, the fix depends on how long the error has run.

A single missed year on an otherwise correct schedule can be handled by amending that year’s return, provided the statute of limitations is still open. If the wrong depreciation has been carried for two or more consecutive years, the IRS treats it as an impermissible method of accounting, and you correct it with Form 3115. That filing is generally automatic (no user fee, no advance IRS permission), and the cumulative catch-up shows up on the current year’s return as a Section 481(a) adjustment.

The greater-of rule bites here. Even if you never claimed the AMT depreciation, your AMT basis already dropped by the “allowable” amount for every year the asset has been in service.¹ Form 3115 recovers the tax benefit you missed; it does not change the basis clock, which has already run.

Getting this wrong has real cost. A substantial understatement of income tax caused by ignored AMT depreciation adjustments can trigger the accuracy-related penalty of 20% of the underpayment, rising to 40% for gross valuation misstatements.⁷

What to Keep in the Asset Ledger

To keep the “AMT Dep Allowed/Allowable” field accurate from year one, the ledger for each asset needs:⁸

Date placed in service, which fixes the convention (half-year or mid-quarter) and the set of rules that applies
Original cost basis, including sales tax, freight, installation, and any capitalized improvements¹
Asset class and recovery period under MACRS
Depreciation method used for regular tax, which determines whether an AMT calculation is even necessary
Prior-year depreciation totals under both systems, carried from the previous Form 4562 and any AMT worksheet

If those five items are recorded correctly, the AMT depreciation number for the current year falls out of the schedule, the “allowed” and “allowable” figures stay in sync, and the AMT basis will be right whenever the asset is sold. Most tax software will populate the field automatically once the asset data is entered, but the software is only as accurate as the placed-in-service date and method it was given.

1
Internal Revenue Service. Publication 946 (2024), How To Depreciate Property
2
Office of the Law Revision Counsel. 26 U.S. Code 56 – Adjustments in Computing Alternative Minimum Taxable Income
3
Internal Revenue Service. 2025 Instructions for Form 6251 – Alternative Minimum Tax—Individuals
4
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
5
Internal Revenue Service. Instructions for Form 6251 (2025)
6
Internal Revenue Service. Alternative Minimum Tax—Individuals – Form 6251
7
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
8
Internal Revenue Service. 2025 Instructions for Form 4562 – Depreciation and Amortization