Instructions For Form 4626 - 2010 (Page 4 of 11) in pdf

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Enter on line 2e the difference

No loss is allowed except to the

An AMT loss that exceeds the

between the regular tax gain or loss

extent the personal service corporation

regular tax loss, or

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and the AMT gain or loss. Enter the

is insolvent.

A regular tax gain that exceeds the

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difference as a negative amount if any

Do not use a loss in the current tax

AMT gain.

of the following apply.

year to offset gains from other tax

Tax Shelter Farm Activities That

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The AMT gain is less than the regular

shelter farm activities. Instead, suspend

Are Passive Activities

tax gain.

any loss and carry it forward indefinitely

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Refigure all gains and losses reported

The AMT loss exceeds the regular

until the corporation has a gain in a

for the regular tax by taking into

tax loss.

subsequent tax year from that same tax

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account the corporation’s AMT

The corporation has an AMT loss

shelter farm activity or it disposes of the

adjustments and preferences and AMT

and a regular tax gain.

activity.

prior year unallowed losses.

Line 2f. Long-Term Contracts

Keep adequate records for

Use the same rules as outlined

losses that are not deductible

TIP

For the AMT, the corporation generally

above for other passive activities, with

(and therefore carried forward)

must use the percentage-of-completion

the following modifications.

for both the AMT and regular tax.

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method described in section 460(b) to

AMT gains from tax shelter farm

Enter on line 2i the difference

determine the taxable income from any

activities that are passive activities may

long-term contract (defined in section

between the AMT gain or loss and the

be used to offset AMT losses from

regular tax gain or loss. Enter the

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

other passive activities.

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difference as a negative amount if the

apply to any home construction contract

AMT losses from tax shelter farm

corporation had:

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

activities that are passive activities may

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An AMT loss and a regular tax gain,

not be used to offset AMT gains from

For contracts excepted from the

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An AMT loss that exceeds the

other passive activities. These losses

percentage-of-completion method for

regular tax loss, or

must be suspended and carried forward

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

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A regular tax gain that exceeds the

indefinitely until the corporation has a

determine the percentage of completion

AMT gain.

gain in a subsequent year from that

using the simplified procedures for

same activity or it disposes of the

allocating costs outlined in section

Line 2j. Passive Activities

activity.

460(b)(3).

Line 2k. Loss Limitations

Subtract the regular tax income from

This adjustment applies only to

the AMT income. Enter the difference

closely held corporations and

Refigure gains and losses reported for

on line 2f. If the AMT income is less

personal service corporations.

the regular tax from at-risk activities

CAUTION

than the regular tax income, enter the

and the corporation’s share of

Refigure all passive activity gains

difference as a negative amount.

distributive items from partnerships by

and losses reported for the regular tax

taking into account the corporation’s

by taking into account the corporation’s

Line 2g. Merchant Marine

AMT adjustments and preferences. If

AMT adjustments and preferences and

Capital Construction Funds

the corporation has recomputed losses

AMT prior year unallowed losses that

that must be limited for the AMT by

Amounts deposited in these funds are

apply to that activity.

section 465 or section 704(d) or the

not deductible for the AMT. Earnings on

Determine the corporation’s AMT

corporation reported losses for the

these funds must be included in gross

passive activity gain or loss using the

regular tax from at-risk activities or

income for the AMT. If the corporation

same rules used for the regular tax.

distributive shares of partnership losses

deducted these amounts or excluded

Generally, no loss is allowed. However,

that were limited by those sections,

them from income for the regular tax,

if the corporation is insolvent, losses

figure the difference between the loss

add them back on line 2g.

are allowed to the extent the

limited for the AMT and the loss limited

corporation is insolvent (see section

Line 2h. Section 833(b)

for the regular tax for each applicable

58(c)).

at-risk activity or distributive share of

Deduction

partnership loss. “Loss limited” means

Disallowed losses of a personal

This deduction is not allowed for the

the amount of loss that is not allowable

service corporation are suspended until

AMT. If the corporation took this

for the year because of the limitations

the corporation has income from that

deduction for the regular tax, add it

above.

(or any other) passive activity or until

back on line 2h.

the passive activity is disposed of (that

Enter on line 2k the excess of the

is, its passive losses cannot offset “net

Line 2i. Tax Shelter Farm

loss limited for the AMT over the loss

active income” (defined in section

limited for the regular tax. If the loss

Activities

469(e)(2)(B) or “portfolio income”)).

limited for the regular tax is more than

Disallowed losses of a closely held

the loss limited for the AMT, enter the

Complete this line only if the

corporation that is not a personal

difference as a negative amount.

corporation is a personal service

service corporation are treated the

Line 2l. Depletion

corporation and it has a gain or

CAUTION

same except that, in addition, they may

loss from a tax shelter farm activity that

be used to offset “net active income.”

Refigure depletion using only income

is not a passive activity. If the tax

and deductions allowed for the AMT

Keep adequate records for

shelter farm activity is a passive

when refiguring the limit based on

activity, include the gain or loss in the

losses that are not deductible

TIP

taxable income from the property under

computations for line 2j.

(and therefore carried forward)

section 613(a) and the limit based on

for both the AMT and regular tax.

Refigure all gains and losses

taxable income, with certain

reported for the regular tax from tax

Enter on line 2j the difference

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

shelter farm activities by taking into

between the AMT gain or loss and the

Also, the depletion deduction for mines,

account any AMT adjustments and

regular tax gain or loss. Enter the

wells, and other natural deposits is

preferences. Determine the AMT gain

difference as a negative amount if the

limited to the property’s adjusted basis

or loss using the rules for the regular

corporation had:

at the end of the year, as refigured for

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tax with the following modifications.

An AMT loss and a regular tax gain,

the AMT, unless the corporation is an

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Instructions For Form 4626 - 2010 Page 4

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