Instructions For Form 4626 - 2010 (Page 2 of 11) in pdf

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The computation of a carryforward of

Act of 1986, this rule applies to property

Specific Instructions

a passive loss or tax shelter farm

placed in service after July 31, 1986.)

activity loss if the AMT amount is

What Depreciation Is Not

different from the regular tax amount;

Line 1. Taxable Income

Refigured for the AMT?

and

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A “running balance” of the excess of

or (Loss) Before Net

Do not refigure depreciation for the

the corporation’s total increases in

AMT for the following.

Operating Loss

alternative minimum taxable income

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Residential rental property placed in

(AMTI) from prior year adjusted current

Deduction

service after 1998.

earnings (ACE) adjustments over the

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Nonresidential real property with a

total reductions in AMTI from prior year

Enter the corporation’s taxable income

class life of 27.5 years or more

ACE adjustments (see the instructions

or (loss) before the NOL deduction,

(generally, a building and its structural

for line 4d on page 6).

after the special deductions, and

components) placed in service after

without regard to any excess inclusion

1998 that is depreciated for the regular

(for example, if filing Form 1120,

Short Period Return

tax using the straight line method.

subtract line 29b from line 28 of that

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Other section 1250 property placed

If the corporation is filing for a period of

form).

in service after 1998 that is depreciated

less than 12 months, AMTI must be

for the regular tax using the straight line

annualized and the tentative minimum

Line 2. Adjustments and

method.

tax prorated based on the number of

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Preferences

months in the short period. Complete

Property (other than section 1250

property) placed in service after 1998

Form 4626 as follows.

that is depreciated for the regular tax

1. Complete lines 1 through 6 in the

To avoid duplication, do not

using the 150% declining balance

normal manner. Subtract line 6 from

include any AMT adjustment or

method or the straight line method.

line 5 to figure AMTI for the short

preference taken into account

CAUTION

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Property for which the corporation

period, but do not enter it on line 7.

on line 2i, 2j, 2k, or 2o in the amounts

elected to use the alternative

2. Multiply AMTI for the short period

to be entered on any other line of this

depreciation system (ADS) for the

by 12. Divide the result by the number

form.

regular tax.

of months in the short period. Enter this

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Line 2a. Depreciation of

Any qualified property eligible for a

result on line 7 and write “Sec.

special depreciation allowance if the

443(d)(1)” on the dotted line to the left

Post-1986 Property

depreciable basis of the property for the

of the entry space.

AMT is the same as for the regular tax.

3. Complete lines 8 through 11.

What Adjustments Are Not

If the depreciable basis for the AMT is

4. Subtract line 11 from line 10.

Included As Depreciation

the same as for the regular tax, no

Multiply the result by the number of

Adjustments?

adjustment is required for any

months in the short period and divide

depreciation figured on the remaining

that result by 12. Enter the final result

Do not make a depreciation adjustment

basis of the qualified property.

on line 12 and write “Sec. 443(d)(2)” on

on line 2a for:

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However, if an election is in effect to

the dotted line to the left of the entry

A tax shelter farm activity. Take this

not have the special allowance apply,

space.

adjustment into account on line 2i.

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the corporation must refigure

5. Complete the rest of the form in

Passive activities. Take this

depreciation for the AMT.

the normal manner.

adjustment into account on line 2j.

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Any part of the cost of any property

An activity for which the corporation

that the corporation elected to expense

is not at risk or income or loss from a

Allocating Differently

under section 179. The reduction to the

partnership interest or stock in an S

depreciable basis of section 179

corporation if the basis limitations

Treated Items Between

property by the amount of the section

apply. Take this adjustment into

Certain Entities and

179 expense deduction is the same for

account on line 2k.

the regular tax and the AMT.

Their Investors

What Depreciation Must Be

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Certain public utility property (if a

Refigured for the AMT?

normalization method of accounting is

For a regulated investment company, a

not used), motion picture films and

real estate investment trust, or a

Generally, the corporation must refigure

video tape, sound recordings, and

common trust fund, see section 59(d)

depreciation for the AMT, including

property that the corporation elects to

for details on allocating certain

depreciation allocable to inventory

exclude from MACRS by using a

differently treated items between the

costs, for the following.

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depreciation method that is not based

entity and its investors.

Property placed in service after 1998

on a term of years, such as the

depreciated for the regular tax using

unit-of-production method.

Optional Write-Off for

the 200% declining balance method

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Any qualified Indian reservation

(generally 3-, 5-, 7-, or 10-year property

Certain Expenditures

property. See section 168(j).

under the modified accelerated cost

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Any qualified revitalization

recovery system (MACRS)), except for

There is no AMT adjustment for the

expenditures for a building for which

qualified property eligible for the special

following items if the corporation elects

the corporation elected to claim the

depreciation allowance.

to deduct them ratably over the period

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commercial revitalization deduction.

Section 1250 property placed in

of time shown for the regular tax.

See section 1400I.

service after 1998 that is not

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Circulation expenditures (personal

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depreciated for the regular tax using

Any natural gas gathering line (as

holding companies only) — 3 years.

the straight line method.

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

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Mining exploration and development

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Tangible property placed in service

service after April 11, 2005, the original

costs — 10 years.

use of which begins with the

after 1986 and before 1999. (If the

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Intangible drilling costs — 60 months.

corporation after April 11, 2005, and

transitional election was made under

See section 59(e) for more details.

section 203(a)(1)(B) of the Tax Reform

which is not under self-construction or

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Instructions For Form 4626 - 2010 Page 2

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