Instructions For Form 4626 - 2005 (Page 6 of 12) in pdf

received or accrued from all oil, gas,

from a cooperative may be includible in

real property and 15 years for

and geothermal wells minus the

income. Unless the distributions are

low-income housing property. Figure

deductions allocable to these properties

nontaxable, include on line 2o the total

the excess of the regular tax

(reduced by the excess IDCs). When

AMT patronage dividend adjustment

depreciation over the AMT depreciation

refiguring net income, use only income

reported to the corporation from the

separately for each property and

and deductions allowed for the AMT.

cooperative.

include only positive adjustments on

line 2o.

Exception. The preference for IDCs

Cooperative’s AMT adjustment. If the

from oil and gas wells does not apply to

corporation is a cooperative, refigure

The adjustment for leased personal

corporations that are independent

the cooperative’s deduction for

property only applies to personal

producers (that is, not integrated oil

patronage dividends by taking into

holding companies. For leased

companies as defined in section

account the cooperative’s AMT

personal property other than recovery

291(b)(4)). However, this benefit may

adjustments and preferences. Subtract

property, enter the excess of the

be limited. First, figure the IDC

the cooperative’s AMT deduction for

depreciation claimed for the property for

preference as if this exception did not

patronage dividends from its regular tax

the regular tax using pre-1987 rules

apply. Then, for purposes of this

deduction for patronage dividends and

over the depreciation allowable for the

exception, complete a second Form

include the result on line 2o. If the AMT

AMT as refigured using the straight line

4626 through line 5, including the IDC

deduction is more than the regular tax

method.

preference. If the amount of the IDC

deduction, include the result as a

For leased 10-year recovery

preference exceeds 40% of the amount

negative amount.

property and leased 15-year public

figured for line 5, enter the excess on

Domestic production activities

utility property, enter the excess of the

line 2n (the benefit of this exception is

deduction. For the AMT, refigure the

regular tax depreciation over the

limited). If the amount of the IDC

corporation’s domestic production

depreciation allowable using the

preference is equal to or less than 40%

activities deduction under section 199

straight line method with a half-year

of the amount figured for line 5, do not

without taking into account any AMT

convention, no salvage value, and a

include an amount on line 2n for oil and

adjustments and preferences. The

recovery period of 15 years (22 years

gas wells (the benefit of this exception

section 199 deduction for the

for 15-year public utility property).

is not limited).

corporation’s AMT is 3% of the smaller

Figure this amount separately for

of (a) the qualified production activities

Line 2o. Other Adjustments

each property and include only positive

income or (b) the alternative minimum

And Preferences

adjustments on line 2o.

taxable income (AMTI), determined

without taking into account the section

Enter the net amount of any other

Related adjustments. AMT

199 deduction. Subtract the

adjustments and preferences, including

adjustments and preferences may

corporation’s AMT section 199

the following.

affect deductions that are based on an

deduction from its regular tax section

income limit (for example, charitable

Income eligible for the possessions

199 deduction and include the result on

contributions). Refigure these

tax credit. If this income was included

line 2o. If the AMT deduction is more

deductions using the income limit as

in the corporation’s taxable income for

than the regular tax deduction, include

modified for the AMT. Include on line

the regular tax, include this amount on

the result as a negative amount.

2o an adjustment for the difference

line 2o as a negative amount.

between the regular tax and AMT

Installment sales. The installment

Income from the alcohol, biodiesel,

amounts for all such deductions. If the

method does not apply for the AMT to

and renewable diesel fuels credits. If

AMT deduction is more than the regular

any nondealer disposition of property

this income was included in the

tax deduction, include the difference as

that occurred after August 16, 1986, but

corporation’s income for the regular tax,

a negative amount.

before the first day of the corporation’s

include this amount on line 2o as a

tax year that began in 1987, if an

negative amount.

Line 4. Adjusted Current

installment obligation to which the

Income as the beneficiary of an

proportionate disallowance rule applied

Earnings (ACE)

estate or trust. If the corporation is the

arose from the disposition. Include as a

beneficiary of an estate or trust, include

negative adjustment on line 2o the

Adjustment

on line 2o the AMT adjustment from

amount of installment sale income

Schedule K-1 (Form 1041), Part III, box

reported for the regular tax.

The ACE adjustment does not

12.

Accelerated depreciation of real

apply to a regulated investment

Net AMT adjustment from an electing

property and certain leased personal

company or a real estate

CAUTION

large partnership. If the corporation

property (pre-1987).

investment trust. Also, for an affiliated

is a partner in an electing large

group filing a consolidated return under

This preference generally

partnership, include on line 2o the

the rules of section 1501, figure line 4b

applies only to property placed

amount from Schedule K-1 (Form

on a consolidated basis.

in service after 1987, but

1065-B), box 6. Also include on line 2o

CAUTION

Line 4b. The following examples

depreciated using pre-1987 rules due to

any amount from Schedule K-1 (Form

illustrate the manner in which line 3 is

transition provisions of the Tax Reform

1065-B), box 5, unless the corporation

subtracted from line 4a to get the

Act of 1986.

is a closely held or personal service

amount to enter on line 4b.

corporation. Closely held and personal

Refigure depreciation for the AMT

service corporations should take any

using the straight line method for real

Example 1. Corporation A has line 4a

amount from box 5 into account when

property for which accelerated

ACE of $25,000. If Corporation A has

figuring the amount to enter on line 2j.

depreciation was determined for the

line 3 pre-adjustment AMTI in the

Patron’s AMT adjustment.

regular tax using pre-1987 rules. Use a

amounts shown on page 7, its line 3

Distributions the corporation received

recovery period of 19 years for 19-year

and line 4a amounts would be

-6-

Instructions For Form 4626 - 2005 Page 6

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