502TP: Computation of Tax Preference Income Modification (2024)
Maryland · Comptroller of Maryland · Used for tax years 2024
Maryland Form 502TP calculates the addition to income for certain tax preference items, including depletion, depreciation under pre-1987 rules, intangible drilling costs, and excluded gains from certain small business stock. It totals these items, subtracts the applicable exclusi
Who files this form
For tax year 2024, an individual or fiduciary of an estate or trust must complete Form 502TP and file it with the income tax return if total tax preference items on line 2 exceed:
- $10,000 for an individual return.
- $20,000 for a joint return.
Tax preference items include depletion, depreciation under pre-1987 rules, intangible drilling costs, and the exclusion for gains on the sale of certain small business stock.
What you'll need
Complete federal Form 6251. You will use:
- Line 2t for intangible drilling costs reported on Form 502TP, line 1c.
- Line 2h for the exclusion of gains on certain small business stock reported on Form 502TP, line 1d.
If applicable, you will also need the depletion and property-basis amounts described in the line 1a instructions, or the depreciation amounts needed for the pre-1987 calculations on line 1b.
The form asks for your name and Social Security number, and your spouse’s name and Social Security number.
How to file
File Form 502TP with your income tax return. The supplied text does not give a mailing address or e-filing directions.
- Complete federal Form 6251 and follow the Form 502TP instructions to enter the applicable tax preference items on lines 1a through 1d.
- Add those amounts on line 2.
- Enter the exclusion on line 3: $10,000 for an individual return or $20,000 for a joint return. Nonresidents and part-year residents may need to use a partial exclusion.
- Subtract line 3 from line 2. If the result is below zero, enter zero on line 4.
- Multiply line 4 by 50% and enter the result on line 5.
- Carry that result to Form 502, line 5; Form 504, Schedule A, line 3; or Form 505, line 19, as applicable.
Print using blue or black ink only.
Common mistakes
- Do not skip the Maryland addition just because you are not subject to federal Alternative Minimum Tax. The addition is required when the stated tax preference threshold is exceeded.
- Taxpayers filing separate Maryland returns must calculate their additions on separate Forms 502TP.
- For line 1b, calculate excess depreciation separately for each property and include only positive amounts.
- Do not include the federal Form 6251 adjustments used to develop federal alternative minimum taxable income. Those adjustments do not affect Maryland tax preference items.
- Nonresidents and part-year residents should include only tax preference items properly allocated to Maryland.
- Use blue or black ink only.
Questions people ask
What does Form 502TP calculate?
It calculates an addition to income for certain tax preference items. Generally, you total the items, subtract the applicable exclusion, and multiply the remaining amount by 50%.
Can a nonresident or part-year resident claim the full exclusion?
Yes, if all tax preference items reported to the IRS are allocated to Maryland. If the items are based on income from both inside and outside Maryland, use a partial exclusion: Maryland-taxable preference items divided by total preference items, multiplied by $10,000 for an individual return or $20,000 for a joint return.
How are S corporation tax preference items handled?
Individual shareholders report their pro rata shares of the corporation’s tax preference items on their individual returns, consistent with how net operating losses are passed through and apportioned for federal purposes.
Where can I get more information?
Visit marylandtaxes.gov, email TAXHELP@marylandtaxes.gov, or call 1-800-638-2937. From Central Maryland, call 410-260-7980.