Instructions For Form 4626 - 2010 (Page 10 of 11) in pdf

are independent producers (that is, not

of any pool of debt obligations for any

making (or previously made) any of the

integrated oil companies as defined in

other pool of debt obligations having

ACE adjustments, refigure the

section 291(b)(4)). If this exception

substantially the same effective interest

property’s adjusted basis for ACE. Then

applies, do not enter an amount on line

rates and maturities. Add back (that is,

refigure the property’s gain or loss.

5a for oil and gas wells.

enter as a positive adjustment) on line

Enter the difference between the

6 any such loss to the extent

AMT gain or loss (used to figure line 2e

recognized for the regular tax.

Line 5b. When figuring ACE, the

of Form 4626) and the ACE gain or

current year deduction for circulation

loss. Enter the difference as a negative

Line 7. Acquisition Expenses of

expenditures under section 173 does

amount if any of the following apply.

Life Insurance Companies for

•

not apply. Therefore, treat circulation

The ACE gain is less than the AMT

Qualified Foreign Contracts

expenditures for ACE using the case

gain.

•

For ACE, acquisition expenses of life

law that existed before section 173 was

The ACE loss is more than the AMT

insurance companies for qualified

enacted.

loss.

•

foreign contracts (as defined in section

The corporation had an ACE loss

807(e)(4) without regard to the

and an AMT gain.

Subtract the ACE expense (if any)

treatment of reinsurance contract rules

from the regular tax expense (for a

Paperwork Reduction Act Notice.

of section 848(e)(5)) must be

personal holding company, from the

We ask for the information on this form

capitalized and amortized by applying

AMT expense used to figure line 2d of

to carry out the Internal Revenue laws

the treatment generally required under

Form 4626) and enter the result on line

of the United States. You are required

generally accepted accounting

5b. If the ACE expense exceeds the

to give us the information. We need it to

principles (and as if this rule applied to

regular tax amount (for a personal

ensure that you are complying with

such contracts for all applicable tax

holding company, the AMT amount),

these laws and to allow us to figure and

years).

enter the result as a negative amount.

collect the right amount of tax.

Subtract the ACE expense (if any)

You are not required to provide the

from the regular tax expense and enter

Do not make this adjustment for

information requested on a form that is

the result on line 7. If the ACE expense

expenditures for which the

subject to the Paperwork Reduction Act

is more than the regular tax expense,

corporation elected the optional

CAUTION

unless the form displays a valid OMB

enter the result as a negative amount.

3-year write-off under section 59(e) for

control number. Books or records

Line 8. Depletion

the regular tax.

relating to a form or its instructions

When figuring ACE, the allowance for

must be retained as long as their

Line 5c. When figuring ACE, the

depletion for any property placed in

contents may become material in the

amortization provisions of section 248

service in a tax year that began after

administration of any Internal Revenue

do not apply. Therefore, charge all

1989 generally must be determined

law. Generally, tax returns and return

organizational expenditures to a capital

under the cost depletion method.

information are confidential, as required

account and do not take them into

by section 6103.

Subtract the ACE expense (if any)

account when figuring ACE until the

from the AMT expense (used to figure

The time needed to complete and

corporation is sold or otherwise

line 2l of Form 4626) and enter the

file this form will vary depending on

disposed of. Enter on line 5c all

result on line 8 of the worksheet. If the

individual circumstances. The

amortization deductions for

ACE expense is more than the AMT

estimated average time is:

organizational expenditures that were

amount, enter the result as a negative

taken for the regular tax during the tax

amount.

Recordkeeping . . . . . . . 18 hr., 39 min.

year.

Exception. Independent oil and gas

Learning about the law

or the form . . . . . . . . . . 12 hr., 00 min.

producers and royalty owners that

Line 5d. The adjustments provided in

Preparing and sending

figured their regular tax depletion

section 312(n)(4) apply in figuring ACE.

the form to the IRS . . . . 12 hr., 51 min.

deduction under section 613A(c) do not

See Regulations section 1.56(g)-1(f)(3).

have an adjustment for ACE purposes.

If you have comments concerning

Line 9. Basis Adjustments in

Line 5e. For any installment sale in a

the accuracy of these time estimates or

Determining Gain or Loss From

suggestions for making this form

tax year that began after 1989, a

Sale or Exchange of Pre-1994

simpler, we would be happy to hear

corporation generally cannot use the

from you. See the instructions for the

installment method to figure ACE.

Property

tax return with which this form is filed.

However, it may use the installment

If, during the tax year, the corporation

method for the applicable percentage

disposed of property for which it is

(as determined under section 453A) of

the gain from any installment sale to

which section 453A(a)(1) applies.

Subtract the installment sale income

reported for AMT from the ACE income

from the sales and enter the result on

line 5e. If the ACE income from the

sales is less than the AMT amount,

enter the difference as a negative

amount.

Line 6. Disallowance of Loss on

Exchange of Debt Pools

When figuring ACE, a corporation may

not recognize any loss on the exchange

-10-

Instructions For Form 4626 - 2010 Page 10

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