Instructions For Form 4626 - Alternative Minimum Tax-Corporations

Property Placed in Service

taxable income, if any, resulting from

Line 2d—Amortization of

the difference.

Before 1999

Circulation Expenditures

Line 2b—Amortization of

IF the property is

THEN use the . . .

Note: This adjustment applies only to

expenditures of a personal holding

Certified Pollution Control

Section 1250

Straight lline method

company for which the company did not

property.

over 40 years.

Facilities

elect the optional 3-year write-off under

For facilities placed in service before

Tangible property

Straight line method

section 59(e) for the regular tax.

(other than section

over the property’s

1999, figure the amortization deduction

For the regular tax, circulation

1250 property)

AMT class life.

for the AMT using ADS (i.e., the

expenditures may be deducted in full

depreciated using

straight line method over the facility’s

when paid or incurred. For the AMT,

straight line for the

class life). For facilities placed in

these expenditures must be capitalized

regular tax.

service after 1998, figure the

and amortized over 3 years.

amortization deduction for the AMT

Any other tangible

150% declining

under MACRS using the straight line

If the corporation had a loss on

property.

balance method,

method. Figure the AMT deduction

property for which circulation

switching to straight

using 100% of the asset’s amortizable

expenditures have not been fully

line the first tax year

it gives a larger

basis. Do not reduce the corporation’s

amortized for the AMT, the AMT

deduction, over the

AMT basis by the 20% section 291

deduction is the smaller of (a) the loss

property’s AMT

allowable for the expenditures had they

adjustment that applied for the regular

class life.

remained capitalized or (b) the

tax.

remaining expenditures to be amortized

Enter the difference between the

for the AMT.

Property placed in service after 1998.

AMT deduction and the regular tax

Use the same convention and recovery

Subtract the AMT deduction from the

deduction on line 2b. If the AMT

period used for the regular tax. Use the

regular tax deduction. Enter the result

deduction is more than the regular tax

straight line method for section 1250

on line 2d. If the AMT deduction is

deduction, enter the difference as a

property. Use the 150% declining

more than the regular tax deduction,

negative amount.

balance method, switching to straight

enter the difference as a negative

line the first tax year it gives a larger

amount.

Line 2c—Amortization of

deduction, for other property.

Mining Exploration and

Line 2e—Adjusted Gain or

How Is the AMT Class Life

Development Costs

Loss

Determined?

Note: This adjustment applies only to

If, during the tax year, the corporation

The class life used for the AMT is not

costs for which the corporation did not

disposed of property for which it is

necessarily the same as the recovery

elect the optional 10-year write-off

making (or previously made) any of the

period used for the regular tax. The

under section 59(e) for the regular tax.

adjustments described on lines 2a

class lives for the AMT are listed in

through 2d above, refigure the

For the AMT, the regular tax

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

property’s adjusted basis for the AMT.

deductions under sections 616(a) and

in Pub. 946, How To Depreciate

Then refigure the gain or loss on the

617(a) are not allowed. Instead,

Property. Use 12 years for any tangible

disposition.

capitalize these costs and amortize

personal property not assigned a class

them ratably over a 10-year period

life.

The property’s adjusted basis for the

beginning with the tax year in which the

AMT is its cost minus all applicable

See Pub. 946 for optional tables

corporation paid or incurred them. The

depreciation or amortization deductions

that may be used to figure AMT

TIP

10-year amortization applies to 100% of

allowed for the AMT during the current

depreciation. Rev. Proc. 89-15,

the mining development and

tax year and previous tax years.

1989-1 C.B. 816, has special rules for

exploration costs paid or incurred

Subtract this AMT basis from the sales

short years and for property disposed

during the tax year. Do not reduce the

price to get the AMT gain or loss.

of before the end of the recovery

corporation’s AMT basis by the 30%

Important: The corporation may also

period.

section 291 adjustment that applied for

have gains or losses from lines 2j, 2k,

the regular tax.

How Is the Line 2a Adjustment

and 2l that must be considered on line

2e. For example, if for the regular tax

Figured?

If the corporation had a loss on

the corporation reports a loss from the

property for which mining exploration

Subtract the AMT deduction for

disposition of an asset used in a

and development costs have not been

depreciation from the regular tax

passive activity, include the loss in the

fully amortized for the AMT, the AMT

deduction and enter the result. If the

computations for line 2k to determine if

deduction is the smaller of (a) the loss

AMT deduction is more than the regular

any passive activity loss is limited for

allowable for the costs had they

tax deduction, enter the difference as a

the AMT. Then, include the AMT

remained capitalized or (b) the

negative amount.

passive activity loss allowed that relates

remaining costs to be amortized for the

In addition to the AMT adjustment to

to the disposition of the asset on line 2e

AMT.

the deduction for depreciation, also

in determining the corporation’s AMT

Subtract the AMT deduction from the

adjust the amount of depreciation that

basis adjustment. It may be helpful to

regular tax deduction. Enter the result

was capitalized, if any, to account for

refigure for the AMT Form 8810 and

the difference between the rules for the

on line 2c. If the AMT deduction is more

related worksheets, Schedule D (Form

than the regular tax deduction, enter

regular tax and the AMT. Include on

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

the difference as a negative amount.

this line the current year adjustment to

4797.

-3-

Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2002 Page 3

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