Instructions For Form 4626 - Alternative Minimum Tax-Corporations

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Department of the Treasury

Internal Revenue Service

Instructions for Form 4626

Alternative Minimum Tax—Corporations

Section references are to the Internal Revenue Code unless otherwise noted.

returns and allowances), amounts

on or after the change date. Also, for

General Instructions

received for services, and income from

line 8 of the ACE Worksheet, take into

investments and other sources. See

account only property placed in service

Purpose of Form

Temporary Regulations section

on or after the change date.

1.448-1T(f)(2)(iv) for more details.

See section 55(e)(3) for exceptions

Use Form 4626 to figure the alternative

•

Gross receipts include those of any

related to any item acquired in a

minimum tax (AMT) under section 55

predecessor of the corporation.

corporate acquisition or to any

for a corporation that is not exempt

•

For a short tax year, gross receipts

substituted basis property, if an AMT

from the AMT.

must be annualized by multiplying them

provision applied to the item or property

Note: For an affiliated group filing a

by 12 and dividing the result by the

while it was held by the transferor.

consolidated return under the rules of

number of months in the tax year.

section 1501, AMT must be figured on

•

Note: Once the corporation loses its

The gross receipts of all persons

a consolidated basis.

small corporation status, it cannot

treated as a single employer under

qualify for any subsequent tax year.

section 52(a), 52(b), 414(m), or 414(o)

Who Must File

must be aggregated.

If the corporation is not a “small

Credit for Prior Year

Loss of small corporation status. If

corporation” exempt from the AMT (as

the corporation qualified as a small

Minimum Tax

explained below), file Form 4626 if:

•

corporation exempt from the AMT for its

The corporation’s taxable income or

A corporation may be able to take a

previous tax year, but does not meet

(loss) before the net operating loss

minimum tax credit against the regular

the gross receipts test for its tax year

(NOL) deduction plus its adjustments

tax for AMT incurred in prior years. See

beginning in 2002, it loses its AMT

and preferences total more than

Form 8827, Credit for Prior Year

exemption status. Special rules apply in

$40,000 or, if smaller, its allowable

Minimum Tax — Corporations, for

figuring AMT for the tax year beginning

exemption amount or

details.

•

in 2002 and all later years based on the

The corporation claims any general

“change date.” The change date is the

business credit, the qualified electric

first day of the corporation’s tax year

Recordkeeping

vehicle credit, the nonconventional

beginning in 2002. Complete Form

source fuel credit, or the credit for prior

Certain items of income, deductions,

4626 taking into account the following

year minimum tax.

credits, etc., receive different tax

modifications.

•

treatment for the AMT than for the

The adjustments for depreciation and

Exemption for Small

regular tax. Therefore, the corporation

amortization of pollution control facilities

Corporations

should keep adequate records to

apply only to property placed in service

support items refigured for the AMT.

A corporation is treated as a small

on or after the change date.

•

Examples include:

corporation exempt from the AMT for its

The adjustment for mining

•

tax year beginning in 2002 if that year

Tax forms completed a second time

exploration and development costs

is the corporation’s first tax year in

to refigure the AMT;

applies only to amounts paid or

•

existence (regardless of its gross

incurred on or after the change date.

The computation of a carryback or

•

receipts for the year) or:

carryforward to other tax years of

The adjustment for long-term

certain deductions or credits (e.g., net

1. It was treated as a small

contracts applies only to contracts

corporation exempt from the AMT for all

operating loss, capital loss, and foreign

entered into on or after the change

prior tax years beginning after 1997

tax credit) if the AMT amount is

date.

•

and

different from the regular tax amount;

When figuring the amount to enter on

•

2. Its average annual gross receipts

The computation of a carryforward of

line 6, for any loss year beginning

for the 3-tax-year period (or portion

a passive loss or tax shelter farm

before the change date, use the

thereof during which the corporation

activity loss if the AMT amount is

corporation’s regular tax NOL for that

was in existence) ending before its tax

different from the regular tax amount;

year.

•

year beginning in 2002 did not exceed

and

Figure the limitation on line 4d only

•

$7.5 million ($5 million if the corporation

for prior tax years beginning on or after

A “running balance” of the excess of

had only 1 prior tax year).

the change date.

the corporation’s total increases in

•

AMTI from prior year adjusted current

The following rules apply when

Enter zero on line 2c of the Adjusted

Current Earnings (ACE) Worksheet

earnings (ACE) adjustments over the

figuring gross receipts under 2 above.

•

total reductions in AMTI from prior year

Gross receipts must be figured using

on page 11. When completing line 5 of

the ACE Worksheet, take into account

ACE adjustments (see the instructions

the corporation’s tax accounting

method and include total sales (net of

only amounts from tax years beginning

for line 4d).

Cat. No. 64443L

Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2002

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