Instructions For Form 4626 - Alternative Minimum Tax - Corporations

•

that began after 1980 and before 1987,

An income item is considered taken

Any allowable domestic production

figure depreciation by using the

into account without regard to the

activities deduction under section 199.

property’s regular tax adjusted basis as

timing of its inclusion in a corporation’s

Special rules apply to:

of the close of the last tax year

pre-adjustment AMTI or its E&P. Only

•

Dividends from certain possession

beginning before 1990 and by using the

income items that are permanently

corporations operating in American

straight line method over the remainder

excluded from pre-adjustment AMTI are

Samoa.

of the recovery period for the property

included in ACE. An income item will

•

Certain dividends received by certain

under ADS. In doing so, use the

not be considered taken into account

cooperatives.

convention that would have applied to

merely because the proceeds from that

the property under section 168(d)

item might eventually be reflected in the

An item is considered taken into

(without regard to section 168(d)(3)).

pre-adjustment AMTI of another

account without regard to the timing of

its deductibility in figuring

For more information (including an

taxpayer (for example, that of a

pre-adjustment AMTI or E&P.

example that illustrates the application

shareholder) on the liquidation or

Therefore, only deduction items that are

of these rules), see Regulations section

disposal of a business.

permanently disallowed in figuring E&P

1.56(g)-1(b)(3).

Exceptions. Do not make an

are disallowed in figuring ACE.

adjustment for the following.

Line 2b(5). Property described in

•

Any income from discharge of

Items for which no adjustment is

sections 168(f)(1) through (4). For

indebtedness excluded from gross

necessary. Generally, no deduction is

this property, use the regular tax

income under section 108 (or the

allowed for an item in figuring ACE if

depreciation, regardless of when the

corresponding provision of prior law).

the item is not deductible in figuring

property was placed in service.

•

Any extraterritorial income excluded

pre-adjustment AMTI (even if the item

Line 2b(5) takes priority over

from gross income under section 114.

is deductible in figuring E&P). The only

•

lines 2b(1), 2b(2), 2b(3), and

For an insurance company taxed

exceptions to this general rule are the

2b(4). For property that is

under section 831(b), any amount not

CAUTION

related reductions to an income item

described in sections 168(f)(1) through

included in gross investment income

described in the second sentence of

(4), use line 2b(5) instead of the line

(as defined in section 834(b)).

the instructions for line 3 above.

•

2b(1), 2b(2), 2b(3), or 2b(4) that would

Any special subsidy payment for

Deductions that are not allowed in

otherwise apply.

prescription drug plans excluded from

figuring ACE include:

•

gross income under section 139A.

Capital losses that exceed capital

Line 2b(6). Other property. Use the

•

Any qualified shipping income

gains;

regular tax depreciation for (a) property

•

excluded under section 1357.

Bribes, fines, and penalties

placed in service before 1981 and (b)

•

Tax-exempt interest on certain

disallowed under section 162;

property placed in service after 1980, in

•

housing bonds issued after July 30,

Charitable contributions that exceed

a tax year that began before 1990, that

2008, excluded under section

the limitations of section 170;

is excluded from MACRS by section

•

57(a)(5)(C)(iii).

Meals and entertainment expenses

168(f)(5)(A)(i) or original ACRS by

•

Tax-exempt interest on private

that exceed the limitations of section

section 168(e)(4), as in effect before

activity bonds issued after December

274;

the Tax Reform Act of 1986.

•

31, 2008, excluded under section

Federal taxes disallowed under

Line 2c. Total ACE depreciation.

56(g)(4)(B)(iv).

section 275; and

•

Subtract line 2b(7) from line 2a and

Golden parachute payments that

Line 3d. Include in ACE the income

enter the result on line 2c. If line 2b(7)

exceed the limitation of section 280G.

on life insurance contracts (as

exceeds line 2a, enter the difference as

determined under section 7702(g)) for

Line 4e. Do not include any

a negative amount.

the tax year minus the part of any

adjustment related to the E&P effects of

premium attributable to insurance

Line 3. Inclusion in ACE of

any charitable contribution.

coverage.

Items Included in Earnings and

Line 5. Other Adjustments

Line 3e. Do not include any

Profits (E&P)

adjustment related to the E&P effects of

Line 5a. Except as noted below, in

In general, any income item that is not

any charitable contribution.

figuring ACE, determine the deduction

taken into account (see below) in

for intangible drilling costs under

determining the corporation’s

Line 4. Disallowance of Items

section 312(n)(2)(A).

pre-adjustment AMTI but that is taken

Not Deductible From E&P

into account in determining its E&P

Subtract the ACE expense (if any)

Generally, no deduction is allowed

must be included in ACE. Any such

from the AMT expense (used to figure

when figuring ACE for items not taken

income item can be reduced by all

line 2n of Form 4626) and enter the

into account (see below) in figuring

items related to that income item and

result on line 5a. If the ACE expense

E&P for the tax year. These amounts

that would be deductible when figuring

exceeds the AMT amount, enter the

increase ACE if they are deductible in

pre-adjustment AMTI if the income

result as a negative amount.

figuring pre-adjustment AMTI (that is,

items to which they relate were

Exception. The above rule does not

they would be positive adjustments).

included in the corporation’s

apply to amounts paid or incurred for

pre-adjustment AMTI for the tax year.

However, there are exceptions. Do

any oil or gas well by corporations that

Examples of these income items and

not add back:

are independent producers (that is, not

•

the adjustments that relate to them

Any deduction allowable under

integrated oil companies as defined in

include:

section 243 or 245 for any dividend that

•

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

Interest income from tax-exempt

qualifies for a 100% dividends-received

applies, do not enter an amount on line

obligations excluded under section 103

deduction under section 243(a), 245(b),

5a for oil and gas wells.

minus any costs incurred in carrying

or 245(c) and

•

these tax-exempt obligations and

Any dividend received from a

Line 5b. When figuring ACE, the

•

Proceeds of life insurance contracts

20%-owned corporation (see section

current year deduction for circulation

excluded under section 101 minus the

243(c)(2)), but only if the dividend is

expenditures under section 173 does

basis in the contract for purposes of

from income of the paying corporation

not apply. Therefore, treat circulation

ACE.

that is subject to federal income tax.

expenditures for ACE using the case

-9-

Instructions For Form 4626 - Alternative Minimum Tax - Corporations - 2008 Page 9

Related Articles

Related forms

Related Categories