Instructions For Form 4626 - 2010 (Page 3 of 11) in pdf

subject to a binding contract in

adjust the amount of depreciation that

Line 2d. Amortization of

existence before April 12, 2005.

was capitalized, if any, to account for

Circulation Expenditures

the difference between the rules for the

How Is Depreciation Refigured

regular tax and the AMT. Include on

for the AMT?

Do not make this adjustment for

this line the current year adjustment to

expenditures of a personal

taxable income, if any, resulting from

Property placed in service after 1998.

holding company for which the

CAUTION

the difference.

Use the same convention and recovery

company elected the optional 3-year

period used for the regular tax. Use the

write-off for the regular tax.

Line 2b. Amortization of

straight line method for section 1250

Certified Pollution Control

For the regular tax, circulation

property. For property other than

expenditures may be deducted in full

section 1250 property, use the 150%

Facilities

when paid or incurred. For the AMT,

declining balance method, switching to

For facilities placed in service before

these expenditures must be capitalized

the straight line method the first tax

1999, figure the amortization deduction

and amortized over 3 years beginning

year it gives a larger deduction.

for the AMT using ADS (that is, the

with the tax year in which the

Property placed in service before

straight line method over the facility’s

expenditures were made.

1999. Refigure depreciation for the

class life). For facilities placed in

AMT using ADS, with the same

If the corporation had a loss on

service after 1998, figure the

convention used for the regular tax.

property for which circulation

amortization deduction for the AMT

expenditures have not been fully

See the table below for the method and

under MACRS using the straight line

amortized for the AMT, the AMT

recovery period to use.

method. Figure the AMT deduction

deduction is the smaller of (a) the loss

using 100% of the asset’s amortizable

Property Placed in Service

allowable for the expenditures had they

basis. Do not reduce the corporation’s

Before 1999

remained capitalized or (b) the

AMT basis by the 20% section 291

remaining expenditures to be amortized

adjustment that applied for the regular

IF the property is . . . THEN use the . . . . .

for the AMT.

tax.

Section 1250 property. Straight line method

Subtract the AMT deduction from the

Enter the difference between the

over 40 years.

regular tax deduction. Enter the result

AMT deduction and the regular tax

on line 2d. If the AMT deduction is

Tangible property

Straight line method

deduction on line 2b. If the AMT

more than the regular tax deduction,

(other than section

over the property’s

deduction is more than the regular tax

enter the difference as a negative

1250 property)

AMT class life.

deduction, enter the difference as a

depreciated using the

amount.

negative amount.

straight line method for

the regular tax.

Line 2e. Adjusted Gain or

Line 2c. Amortization of

Loss

Any other tangible

150% declining

Mining Exploration and

property.

balance method,

If, during the tax year, the corporation

Development Costs

switching to the straight

disposed of property for which it is

line method the first tax

year it gives a larger

making (or previously made) any of the

Do not make this adjustment for

deduction, over the

adjustments described on lines 2a

costs for which the corporation

property’s AMT class

through 2d above, refigure the

elected the optional 10-year

life.

CAUTION

property’s adjusted basis for the AMT.

write-off for the regular tax.

Then refigure the gain or loss on the

How is the AMT class life

For the AMT, the regular tax

disposition.

determined? For property placed in

deductions under sections 616(a) and

The property’s adjusted basis for the

service before 1999, the class life used

617(a) are not allowed. Instead,

AMT is its cost minus all applicable

for the AMT is not necessarily the same

capitalize these costs and amortize

depreciation or amortization deductions

as the recovery period used for the

them ratably over a 10-year period

allowed for the AMT during the current

regular tax.

beginning with the tax year in which the

tax year and previous tax years.

corporation paid or incurred them. The

The class lives are listed in Rev.

Subtract this AMT basis from the sales

10-year amortization applies to 100% of

Proc. 87-56, 1987-2 C.B. 674, Rev.

price to get the AMT gain or loss.

the mining development and

Proc. 88-22, 1988-1 C.B. 785, and in

Dispositions for which line 2i, 2j, and

exploration costs paid or incurred

Pub. 946, How To Depreciate Property.

2k adjustments are made. The

during the tax year. Do not reduce the

See Pub. 946 for tables that can

corporation’s AMT basis by the 30%

corporation may also have gains or

be used to figure AMT

TIP

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

section 291 adjustment that applied for

depreciation. Rev. Proc. 89-15,

must be considered on line 2e. For

the regular tax.

1989-1 C.B. 816, and Pub. 946 have

example, if for the regular tax the

If the corporation had a loss on

special rules for short tax years and for

corporation reports a loss from the

property for which mining exploration

property disposed of before the end of

disposition of an asset used in a

and development costs have not been

the recovery period.

passive activity, include the loss in the

fully amortized for the AMT, the AMT

computations for line 2j to determine if

How Is the Line 2a Adjustment

deduction is the smaller of (a) the loss

any passive activity loss is limited for

Figured?

allowable for the costs had they

the AMT. Then, include the AMT

remained capitalized or (b) the

Subtract the AMT deduction for

passive activity loss allowed that relates

remaining costs to be amortized for the

depreciation from the regular tax

to the disposition of the asset on line 2e

AMT.

deduction and enter the result on line

in determining the corporation’s AMT

2a. If the AMT deduction is more than

Subtract the AMT deduction from the

basis adjustment. It may be helpful to

the regular tax deduction, enter the

regular tax deduction. Enter the result

refigure the following for the AMT: Form

difference as a negative amount.

on line 2c. If the AMT deduction is more

8810 and related worksheets, Schedule

In addition to the AMT adjustment to

than the regular tax deduction, enter

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

the deduction for depreciation, also

the difference as a negative amount.

or Form 4797.

-3-

Instructions For Form 4626 - 2010 Page 3

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