Instructions For Form 4626 - 2009 (Page 4 of 11) in pdf

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

or loss using the rules for the regular

An AMT loss and a regular tax gain,

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or Form 4797.

tax with the following modifications.

An AMT loss that exceeds the

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No loss is allowed except to the

regular tax loss, or

Enter on line 2e the difference

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extent the personal service corporation

A regular tax gain that exceeds the

between the regular tax gain or loss

is insolvent.

AMT gain.

and the AMT gain or loss. Enter the

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Do not use a loss in the current tax

difference as a negative amount if any

Tax Shelter Farm Activities That

year to offset gains from other tax

of the following apply.

Are Passive Activities

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shelter farm activities. Instead, suspend

The AMT gain is less than the regular

Refigure all gains and losses reported

any loss and carry it forward indefinitely

tax gain.

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for the regular tax by taking into

until the corporation has a gain in a

The AMT loss exceeds the regular

account the corporation’s AMT

subsequent tax year from that same tax

tax loss.

adjustments and preferences and AMT

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shelter farm activity or it disposes of the

The corporation has an AMT loss

prior year unallowed losses.

activity.

and a regular tax gain.

Use the same rules as outlined

Keep adequate records for

Line 2f. Long-Term Contracts

above for other passive activities, with

TIP

losses that are not deductible

the following modifications.

For the AMT, the corporation generally

(and therefore carried forward)

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AMT gains from tax shelter farm

must use the percentage-of-completion

for both the AMT and regular tax.

activities that are passive activities may

method described in section 460(b) to

Enter on line 2i the difference

be used to offset AMT losses from

determine the taxable income from any

between the AMT gain or loss and the

other passive activities.

long-term contract (defined in section

regular tax gain or loss. Enter the

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AMT losses from tax shelter farm

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

difference as a negative amount if the

activities that are passive activities may

apply to any home construction contract

corporation had:

not be used to offset AMT gains from

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

An AMT loss and a regular tax gain,

other passive activities. These losses

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For contracts excepted from the

An AMT loss that exceeds the

must be suspended and carried forward

regular tax loss, or

percentage-of-completion method for

indefinitely until the corporation has a

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

A regular tax gain that exceeds the

gain in a subsequent year from that

determine the percentage of completion

AMT gain.

same activity or it disposes of the

using the simplified procedures for

activity.

Line 2j. Passive Activities

allocating costs outlined in section

Line 2k. Loss Limitations

460(b)(3).

This adjustment applies only to

Subtract the regular tax income from

Refigure gains and losses reported for

closely held corporations and

the AMT income. Enter the difference

the regular tax from at-risk activities

personal service corporations.

CAUTION

on line 2f. If the AMT income is less

and the corporation’s share of

Refigure all passive activity gains

than the regular tax income, enter the

distributive items from partnerships by

and losses reported for the regular tax

difference as a negative amount.

taking into account the corporation’s

by taking into account the corporation’s

AMT adjustments and preferences. If

Line 2g. Merchant Marine

AMT adjustments and preferences and

the corporation has recomputed losses

AMT prior year unallowed losses that

Capital Construction Funds

that must be limited for the AMT by

apply to that activity.

section 465 or section 704(d) or the

Amounts deposited in these funds are

corporation reported losses for the

Determine the corporation’s AMT

not deductible for the AMT. Earnings on

regular tax from at-risk activities or

passive activity gain or loss using the

these funds must be included in gross

distributive shares of partnership losses

same rules used for the regular tax.

income for the AMT. If the corporation

that were limited by those sections,

Generally, no loss is allowed. However,

deducted these amounts or excluded

figure the difference between the loss

if the corporation is insolvent, losses

them from income for the regular tax,

limited for the AMT and the loss limited

are allowed to the extent the

add them back on line 2g.

for the regular tax for each applicable

corporation is insolvent (see section

at-risk activity or distributive share of

Line 2h. Section 833(b)

58(c)).

partnership loss. “Loss limited” means

Deduction

Disallowed losses of a personal

the amount of loss that is not allowable

service corporation are suspended until

This deduction is not allowed for the

for the year because of the limitations

the corporation has income from that

AMT. If the corporation took this

above.

(or any other) passive activity or until

deduction for the regular tax, add it

Enter on line 2k the excess of the

the passive activity is disposed of (that

back on line 2h.

loss limited for the AMT over the loss

is, its passive losses cannot offset “net

limited for the regular tax. If the loss

Line 2i. Tax Shelter Farm

active income” (defined in section

limited for the regular tax is more than

469(e)(2)(B) or “portfolio income”)).

Activities

the loss limited for the AMT, enter the

Disallowed losses of a closely held

difference as a negative amount.

corporation that is not a personal

Complete this line only if the

service corporation are treated the

Line 2l. Depletion

corporation is a personal service

same except that, in addition, they may

corporation and it has a gain or

CAUTION

Refigure depletion using only income

be used to offset “net active income.”

loss from a tax shelter farm activity that

and deductions allowed for the AMT

is not a passive activity. If the tax

Keep adequate records for

when refiguring the limit based on

shelter farm activity is a passive

TIP

losses that are not deductible

taxable income from the property under

activity, include the gain or loss in the

(and therefore carried forward)

section 613(a) and the limit based on

computations for line 2j.

for both the AMT and regular tax.

taxable income, with certain

Refigure all gains and losses

Enter on line 2j the difference

adjustments, under section 613A(d)(1).

reported for the regular tax from tax

between the AMT gain or loss and the

Also, the depletion deduction for mines,

shelter farm activities by taking into

regular tax gain or loss. Enter the

wells, and other natural deposits is

account any AMT adjustments and

difference as a negative amount if the

limited to the property’s adjusted basis

preferences. Determine the AMT gain

corporation had:

at the end of the year, as refigured for

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Instructions For Form 4626 - 2009 Page 4

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