Instructions For Form 4626 - 2005 (Page 4 of 12) in pdf

them ratably over a 10-year period

property’s adjusted basis for the AMT.

Line 2g. Merchant Marine

beginning with the tax year in which the

Then refigure the gain or loss on the

Capital Construction Funds

corporation paid or incurred them. The

disposition.

Amounts deposited in these funds are

10-year amortization applies to 100% of

The property’s adjusted basis for the

not deductible for the AMT. Earnings on

the mining development and

AMT is its cost minus all applicable

exploration costs paid or incurred

these funds must be included in gross

depreciation or amortization deductions

during the tax year. Do not reduce the

income for the AMT. If the corporation

allowed for the AMT during the current

corporation’s AMT basis by the 30%

deducted these amounts or excluded

tax year and previous tax years.

section 291 adjustment that applied for

them from income for the regular tax,

Subtract this AMT basis from the sales

the regular tax.

add them back on line 2g.

price to get the AMT gain or loss.

If the corporation had a loss on

Line 2h. Section 833(b)

Dispositions for which line 2i, 2j, and

property for which mining exploration

2k adjustments are made. The

Deduction

and development costs have not been

corporation may also have gains or

fully amortized for the AMT, the AMT

This deduction is not allowed for the

losses from lines 2i, 2j, and 2k that

deduction is the smaller of (a) the loss

AMT. If the corporation took this

must be considered on line 2e. For

allowable for the costs had they

deduction for the regular tax, add it

example, if for the regular tax the

remained capitalized or (b) the

back on line 2h.

corporation reports a loss from the

remaining costs to be amortized for the

disposition of an asset used in a

AMT.

Line 2i. Tax Shelter Farm

passive activity, include the loss in the

Subtract the AMT deduction from the

computations for line 2j to determine if

Activities

regular tax deduction. Enter the result

any passive activity loss is limited for

on line 2c. If the AMT deduction is more

the AMT. Then, include the AMT

Complete this line only if the

than the regular tax deduction, enter

passive activity loss allowed that relates

corporation is a personal service

the difference as a negative amount.

to the disposition of the asset on line 2e

corporation and it has a gain or

CAUTION

in determining the corporation’s AMT

loss from a tax shelter farm activity that

Line 2d. Amortization of

basis adjustment. It may be helpful to

is not a passive activity. If the tax

refigure the following for the AMT: Form

Circulation Expenditures

shelter farm activity is a passive

8810 and related worksheets, Schedule

activity, include the gain or loss in the

D (Form 1120), Form 4684 (Section B),

Do not make this adjustment for

computations for line 2j.

or Form 4797.

expenditures of a personal

holding company for which the

Refigure all gains and losses

CAUTION

Enter on line 2e the difference

company elected the optional 3-year

reported for the regular tax from tax

between the regular tax gain or loss

write-off for the regular tax.

shelter farm activities by taking into

and the AMT gain or loss. Enter the

account any AMT adjustments and

difference as a negative amount if any

For the regular tax, circulation

preferences. Determine the AMT gain

of the following apply.

expenditures may be deducted in full

•

or loss using the rules for the regular

The AMT gain is less than the regular

when paid or incurred. For the AMT,

tax with the following modifications.

tax gain.

these expenditures must be capitalized

•

No loss is allowed except to the

The AMT loss exceeds the regular

and amortized over 3 years beginning

extent the personal service corporation

with the tax year in which the

tax loss.

•

is insolvent.

expenditures were made.

The corporation has an AMT loss

•

and a regular tax gain.

Do not use a loss in the current tax

If the corporation had a loss on

year to offset gains from other tax

property for which circulation

Line 2f. Long-Term Contracts

shelter farm activities. Instead, suspend

expenditures have not been fully

any loss and carry it forward indefinitely

For the AMT, the corporation generally

amortized for the AMT, the AMT

until the corporation has a gain in a

must use the percentage-of-completion

deduction is the smaller of (a) the loss

subsequent tax year from that same tax

method described in section 460(b) to

allowable for the expenditures had they

shelter farm activity or it disposes of the

determine the taxable income from any

remained capitalized or (b) the

activity.

long-term contract (defined in section

remaining expenditures to be amortized

460(f)). However, this rule does not

for the AMT.

Keep adequate records for

apply to any home construction contract

Subtract the AMT deduction from the

TIP

losses that are not deductible

(as defined in section 460(e)(6)).

regular tax deduction. Enter the result

(and therefore carried forward)

For contracts excepted from the

on line 2d. If the AMT deduction is

for both the AMT and regular tax.

percentage-of-completion method for

more than the regular tax deduction,

the regular tax by section 460(e)(1),

Enter on line 2i the difference

enter the difference as a negative

determine the percentage of completion

between the AMT gain or loss and the

amount.

using the simplified procedures for

regular tax gain or loss. Enter the

Line 2e. Adjusted Gain or

allocating costs outlined in section

difference as a negative amount if the

460(b)(3).

corporation had:

Loss

•

An AMT loss and a regular tax gain,

If, during the tax year, the corporation

Subtract the regular tax income from

•

An AMT loss that exceeds the

disposed of property for which it is

the AMT income. Enter the difference

regular tax loss, or

making (or previously made) any of the

on line 2f. If the AMT income is less

•

A regular tax gain that exceeds the

adjustments described on lines 2a

than the regular tax income, enter the

AMT gain.

through 2d above, refigure the

difference as a negative amount.

-4-

Instructions For Form 4626 - 2005 Page 4

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