Instructions For Form 4626 - 2010 (Page 5 of 11) in pdf

Excess IDCs. Excess IDCs are the

Income as the beneficiary of an

independent producer or royalty owner

estate or trust. If the corporation is

claiming percentage depletion for oil

excess of:

•

and gas wells. Figure this limit

the beneficiary of an estate or trust,

The amount of IDCs the corporation

separately for each property. When

include on line 2o the AMT adjustment

paid or incurred for oil, gas, or

refiguring the property’s adjusted basis,

from Schedule K-1 (Form 1041), Part

geothermal properties that it elected to

take into account any AMT adjustments

III, box 12.

expense for the regular tax (not

the corporation made this year or in

including any IDCs paid or incurred for

Net AMT adjustment from an electing

previous years that affect basis (other

nonproductive wells) reduced by the

large partnership. If the corporation

than the current year’s depletion). Do

section 291(b)(1) adjustment for

is a partner in an electing large

not include in the property’s adjusted

integrated oil companies and increased

partnership, include on line 2o the

basis any unrecovered costs of

by any IDCs allowed to be amortized

amount from Schedule K-1 (Form

depreciable tangible property used to

under section 291(b)(2) over

1065-B), box 6. Also include on line 2o

exploit the deposits (for example,

•

The amount that would have been

any amount from Schedule K-1 (Form

machinery, tools, pipes, etc.).

allowed if the corporation had

1065-B), box 5, unless the corporation

For iron ore and coal (including

amortized that amount over a

is a closely held or personal service

lignite), apply the section 291

120-month period starting with the

corporation. Closely held and personal

adjustment before figuring this

month the well was placed in

service corporations should take any

preference.

production or, alternatively, had elected

amount from box 5 into account when

any method that is permissible in

figuring the amount to enter on line 2j.

Enter on line 2l the difference

determining cost depletion.

between the regular tax and the AMT

Patron’s AMT adjustment.

deduction. If the AMT deduction is

Net income from oil, gas, and

Distributions the corporation received

more than the regular tax deduction,

geothermal properties. Net income is

from a cooperative may be includible in

enter the difference as a negative

the gross income the corporation

income. Unless the distributions are

amount.

received or accrued from all oil, gas,

nontaxable, include on line 2o the total

and geothermal wells minus the

AMT patronage dividend adjustment

Line 2m. Tax-Exempt Interest

deductions allocable to these properties

reported to the corporation from the

Income From Specified

(reduced by the excess IDCs). When

cooperative.

Private Activity Bonds

refiguring net income, use only income

Cooperative’s AMT adjustment. If

and deductions allowed for the AMT.

Enter on line 2m interest income from

the corporation is a cooperative,

specified private activity bonds,

refigure the cooperative’s deduction for

Exception. The preference for IDCs

reduced by any deduction that would

patronage dividends by taking into

from oil and gas wells does not apply to

have been allowable if the interest were

account the cooperative’s AMT

corporations that are independent

includible in gross income for the

adjustments and preferences. Subtract

producers (that is, not integrated oil

regular tax.

the cooperative’s AMT deduction for

companies as defined in section

patronage dividends from its regular tax

291(b)(4)). However, this benefit may

Generally, a specified private activity

deduction for patronage dividends and

be limited. First, figure the IDC

bond is any private activity bond (as

include the result on line 2o. If the AMT

preference as if this exception did not

defined in section 141) issued after

deduction is more than the regular tax

apply. Then, for purposes of this

August 7, 1986, on which the interest is

deduction, include the result as a

exception, complete a second Form

not includible in gross income for the

negative amount.

4626 through line 5, including the IDC

regular tax. Specified private activity

preference. If the amount of the IDC

bonds do not include:

Domestic production activities

•

preference exceeds 40% of the amount

Qualified 501(c)(3) bonds;

deduction. For the AMT, figure the

•

figured for line 5, enter the excess on

Certain housing bonds issued after

corporation’s domestic production

line 2n (the benefit of this exception is

July 30, 2008; and

activities deduction under section 199

•

limited). If the amount of the IDC

Bonds issued after December 31,

without taking into account any AMT

preference is equal to or less than 40%

2008, and before January 1, 2011.

adjustments and preferences. The

of the amount figured for line 5, do not

See section 57(a)(5)(C) for more

section 199 deduction for the

include an amount on line 2n for oil and

information and other exceptions.

corporation’s AMT is 9% of the smaller

gas wells (the benefit of this exception

of (a) the qualified production activities

Do not include interest on qualified

is not limited).

income or (b) the alternative minimum

Gulf Opportunity Zone bonds or

taxable income (AMTI), determined

qualified Midwestern disaster area

Line 2o. Other Adjustments

without taking into account the section

bonds.

And Preferences

199 deduction. Subtract the

Line 2n. Intangible Drilling

corporation’s AMT section 199

Enter the net amount of any other

Costs

deduction from its regular tax section

adjustments and preferences, including

199 deduction and include the result on

the following.

line 2o. If the AMT deduction is more

Do not make this adjustment for

Income eligible for the American

than the regular tax deduction, include

costs for which the corporation

Samoa economic development

the result as a negative amount.

elected the optional 60-month

CAUTION

credit. If this income was included in

write-off for the regular tax.

Installment sales. The installment

the corporation’s taxable income for the

Intangible drilling costs (IDCs) from

method does not apply for the AMT to

regular tax, include this amount on line

oil, gas, and geothermal properties are

any nondealer disposition of property

2o as a negative amount.

a preference to the extent excess IDCs

that occurred after August 16, 1986, but

exceed 65% of the net income from the

Income from the alcohol, biodiesel,

before the first day of the corporation’s

and renewable diesel fuels credits.

properties. Figure the preference for all

tax year that began in 1987, if an

geothermal deposits separately from

If this income was included in the

installment obligation to which the

the preference for all oil and gas

corporation’s income for the regular tax,

proportionate disallowance rule applied

properties that are not geothermal

include this amount on line 2o as a

arose from the disposition. Include as a

deposits.

negative amount.

negative adjustment on line 2o the

-5-

Instructions For Form 4626 - 2010 Page 5

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