Instructions For Form 4626 - 2005 (Page 2 of 12) in pdf

only property placed in service on or

months in the short period. Complete

Line 1. Taxable Income

after the change date.

Form 4626 as follows.

or (Loss) Before Net

1. Complete lines 1 through 6 in the

Note. No additional modification in

normal manner. Subtract line 6 from

figuring AMT is required for exceptions

Operating Loss

line 5 to figure AMTI for the short

related to any item acquired in a

Deduction

period, but do not enter it on line 7.

corporate acquisition under section 381

2. Multiply AMTI for the short period

or to any substituted basis property, if

Enter the corporation’s taxable income

by 12. Divide the result by the number

any of the AMT adjustment

or (loss) before the NOL deduction,

modifications listed on page 1 applied

of months in the short period. Enter this

after the special deductions, and

to the item or property while it was held

result on line 7 and write “Sec.

without regard to any excess inclusion

by the transferor.

443(d)(1)” on the dotted line to the left

(for example, if filing Form 1120,

of the entry space.

subtract line 29b from line 28 of that

Once the corporation loses its

3. Complete lines 8 through 11.

form).

small corporation status, it

4. Subtract line 11 from line 10.

cannot qualify for any

CAUTION

Line 2. Adjustments and

Multiply the result by the number of

subsequent tax year.

months in the short period and divide

Preferences

that result by 12. Enter the final result

Credit for Prior Year

on line 12 and write “Sec. 443(d)(2)” on

To avoid duplication, do not

Minimum Tax

the dotted line to the left of the entry

include any AMT adjustment or

space.

A corporation may be able to take a

preference taken into account

CAUTION

5. Complete the rest of the form in

minimum tax credit against the regular

on line 2i, 2j, 2k, or 2o in the amounts

the normal manner.

tax for AMT incurred in prior years. See

to be entered on any other line of this

Form 8827, Credit for Prior Year

form.

Minimum Tax — Corporations, for

Allocating Differently

Line 2a. Depreciation of

details.

Post-1986 Property

Treated Items Between

Recordkeeping

Certain Entities and

What Adjustments Are Not

Certain items of income, deductions,

Included As Depreciation

Their Investors

credits, etc., receive different tax

Adjustments?

treatment for the AMT than for the

For a regulated investment company, a

Do not make a depreciation adjustment

regular tax. Therefore, the corporation

real estate investment trust, or a

on line 2a for:

should keep adequate records to

common trust fund, see section 59(d)

•

A tax shelter farm activity. Take this

support items refigured for the AMT.

for details on allocating certain

Examples include:

adjustment into account on line 2i.

•

differently treated items between the

Passive activities. Take this

Tax forms used for regular tax

entity and its investors.

adjustment into account on line 2j.

purposes that are completed a second

•

An activity for which the corporation

time to refigure items of income,

is not at risk or income or loss from a

deductions, etc., for the AMT;

Optional Write-Off for

•

partnership interest or stock in an S

The computation of a carryback or

Certain Expenditures

corporation if the basis limitations

carryforward to other tax years of

apply. Take this adjustment into

certain deductions or credits (for

There is no AMT adjustment for the

account on line 2k.

example, net operating loss, capital

following items if the corporation elects

loss, and foreign tax credit) if the AMT

to deduct them ratably over the period

What Depreciation Must Be

amount is different from the regular tax

of time shown for the regular tax.

Refigured for the AMT?

amount;

•

Circulation expenditures (personal

•

Generally, the corporation must refigure

The computation of a carryforward of

holding companies only) — 3 years.

depreciation for the AMT, including

a passive loss or tax shelter farm

•

Mining exploration and development

depreciation allocable to inventory

activity loss if the AMT amount is

costs — 10 years.

costs, for:

different from the regular tax amount;

•

Intangible drilling costs — 60 months.

Property placed in service after 1998

and

•

depreciated for the regular tax using

A “running balance” of the excess of

See section 59(e) for more details.

the 200% declining balance method

the corporation’s total increases in

(generally 3-, 5-, 7-, or 10-year property

alternative minimum taxable income

under the modified accelerated cost

(AMTI) from prior year adjusted current

recovery system (MACRS), except for

earnings (ACE) adjustments over the

Specific Instructions

qualified property eligible for the special

total reductions in AMTI from prior year

depreciation allowance (see page 3));

ACE adjustments (see the instructions

•

If the corporation is electing the

Section 1250 property placed in

for line 4d on page 7).

85% dividends received

service after 1998 that is not

deduction under section 965,

depreciated for the regular tax using

CAUTION

Short Period Return

see the instructions for Part III of Form

the straight line method; and

•

8895, One-Time Dividends Received

If the corporation is filing for a period of

Tangible property placed in service

Deduction for Certain Cash Dividends

less than 12 months, AMTI must be

after 1986 and before 1999. (If the

annualized and the tentative minimum

from Controlled Foreign Corporations,

transitional election was made under

tax prorated based on the number of

before completing Form 4626.

section 203(a)(1)(B) of the Tax Reform

-2-

Instructions For Form 4626 - 2005 Page 2

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