Instructions For Form 4626 - 2005 (Page 3 of 12) in pdf

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Act of 1986, this rule applies to property

Qualified Indian reservation property

The class lives are listed in Rev.

Proc. 87-56, 1987-2 C.B. 674, and in

placed in service after July 31, 1986.)

placed in service after 1993 and before

Pub. 946, How To Depreciate Property.

2006.

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What Depreciation Is Not

Qualified revitalization expenditures

See Pub. 946 for tables that can

Refigured for the AMT?

for a building for which the corporation

TIP

be used to figure AMT

elected to claim the commercial

Do not refigure depreciation for the

depreciation. Rev. Proc. 89-15,

revitalization deduction.

AMT for the following.

1989-1 C.B. 816, and Pub. 946 have

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Any natural gas gathering line (as

special rules for short tax years and for

Residential rental property placed in

defined in section 168(i)(17)) placed in

property disposed of before the end of

service after 1998.

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service after April 11, 2005, the original

the recovery period.

Nonresidential real property with a

use of which begins with the

class life of 27.5 years or more

How Is the Line 2a Adjustment

corporation after April 11, 2005, and

(generally, a building and its structural

Figured?

which is not under self-construction or

components) placed in service after

subject to a binding contract in

Subtract the AMT deduction for

1998 that is depreciated for the regular

existence before April 12, 2005.

depreciation from the regular tax

tax using the straight line method.

deduction and enter the result on line

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Other section 1250 property placed

How Is Depreciation Refigured

2a. If the AMT deduction is more than

in service after 1998 that is depreciated

the regular tax deduction, enter the

for the AMT?

for the regular tax using the straight line

difference as a negative amount.

method.

Property placed in service after 1998.

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In addition to the AMT adjustment to

Property (other than section 1250

Use the same convention and recovery

the deduction for depreciation, also

property) placed in service after 1998

period used for the regular tax. Use the

adjust the amount of depreciation that

that is depreciated for the regular tax

straight line method for section 1250

was capitalized, if any, to account for

using the 150% declining balance

property. For property other than

the difference between the rules for the

method or the straight line method.

section 1250 property, use the 150%

regular tax and the AMT. Include on

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declining balance method, switching to

Property for which the corporation

this line the current year adjustment to

the straight line method the first tax

elected to use the alternative

taxable income, if any, resulting from

year it gives a larger deduction.

depreciation system (ADS) of section

the difference.

168(g) for the regular tax.

Property placed in service before

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Line 2b. Amortization of

Qualified property eligible for the

1999. Refigure depreciation for the

special depreciation allowance under

Certified Pollution Control

AMT using ADS, with the same

sections 168(k), 1400L(b) (in the case

Facilities

convention used for the regular tax.

of qualified Liberty Zone property), and

See the table below for the method and

For facilities placed in service before

1400N(d) (in the case of qualified Gulf

recovery period to use.

1999, figure the amortization deduction

Opportunity Zone property acquired

for the AMT using ADS (that is, the

after August 27, 2005), if the

straight line method over the facility’s

Property Placed in Service

depreciable basis of the property for the

class life). For facilities placed in

Before 1999

AMT is the same as for the regular tax.

service after 1998, figure the

The special allowance is deductible for

amortization deduction for the AMT

IF the property is

THEN use the . . .

the AMT. And, there also is no

under MACRS using the straight line

adjustment required for any

Section 1250

Straight line method

method. Figure the AMT deduction

depreciation figured on the remaining

property.

over 40 years.

using 100% of the asset’s amortizable

basis of the qualified property if the

basis. Do not reduce the corporation’s

Tangible property

Straight line method

depreciable basis of the property for the

AMT basis by the 20% section 291

(other than section

over the property’s

AMT is the same as for the regular tax.

adjustment that applied for the regular

1250 property)

AMT class life.

Property for which an election is in

tax.

depreciated using

effect to not have the special allowance

the straight line

Enter the difference between the

apply is not qualified property. See the

method for the

AMT deduction and the regular tax

Instructions for Form 4562 for the

regular tax.

deduction on line 2b. If the AMT

definition of qualified property.

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deduction is more than the regular tax

Any other tangible

150% declining

Any part of the cost of any property

deduction, enter the difference as a

property.

balance method,

that the corporation elected to expense

negative amount.

switching to the

under section 179. The reduction to the

straight line method

depreciable basis of section 179

Line 2c. Amortization of

the first tax year it

property by the amount of the section

Mining Exploration and

gives a larger

179 expense deduction is the same for

deduction, over the

Development Costs

the regular tax and the AMT.

property’s AMT

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Certain public utility property (if a

class life.

Do not make this adjustment for

normalization method of accounting is

costs for which the corporation

not used), motion picture films and

elected the optional 10-year

video tape, sound recordings, and

How is the AMT class life

CAUTION

write-off for the regular tax.

property that the corporation elects to

determined? For property placed in

exclude from MACRS by using a

service before 1999, the class life used

For the AMT, the regular tax

depreciation method based on a term

for the AMT is not necessarily the same

deductions under sections 616(a) and

of years, such as the unit-of-production

as the recovery period used for the

617(a) are not allowed. Instead,

method.

regular tax.

capitalize these costs and amortize

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Instructions For Form 4626 - 2005 Page 3

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