Instructions For Form 4626 - Alternative Minimum Tax-Corporations

How Is Depreciation Refigured

regular tax and the AMT. Include on

Line 2d. Amortization of

this line the current year adjustment to

for the AMT?

Circulation Expenditures

taxable income, if any, resulting from

Property placed in service after 1998.

the difference.

Complete this line only if the

Use the same convention and recovery

corporation is a personal

period used for the regular tax. Use the

Line 2b. Amortization of

holding company. Do not make

straight line method for section 1250

CAUTION

Certified Pollution Control

this adjustment for expenditures of a

property. For property other than

personal holding company for which the

section 1250 property, use the 150%

Facilities

company elected the optional 3-year

declining balance method, switching to

For facilities placed in service before

write-off for the regular tax.

the straight line method the first tax

1999, figure the amortization deduction

year it gives a larger deduction.

For the regular tax, circulation

for the AMT using ADS (that is, the

Property placed in service before

expenditures may be deducted in full

straight line method over the facility’s

1999. Refigure depreciation for the

when paid or incurred. For the AMT,

class life). For facilities placed in

AMT using ADS, with the same

these expenditures must be capitalized

service after 1998, figure the

convention used for the regular tax.

and amortized over 3 years beginning

amortization deduction for the AMT

See the table below for the method and

with the tax year in which the

under MACRS using the straight line

recovery period to use.

expenditures were made.

method. Figure the AMT deduction

Property Placed in Service

using 100% of the asset’s amortizable

If the corporation had a loss on

basis. Do not reduce the corporation’s

property for which circulation

Before 1999

AMT basis by the 20% section 291

expenditures have not been fully

adjustment that applied for the regular

amortized for the AMT, the AMT

IF the property is . . . THEN use the . . . . .

tax.

deduction is the smaller of (a) the loss

Section 1250 property. Straight line method

allowable for the expenditures had they

over 40 years.

Enter the difference between the

remained capitalized or (b) the

Tangible property

Straight line method

AMT deduction and the regular tax

remaining expenditures to be amortized

(other than section

over the property’s

deduction on line 2b. If the AMT

for the AMT.

1250 property)

AMT class life.

deduction is more than the regular tax

depreciated using the

Subtract the AMT deduction from the

deduction, enter the difference as a

straight line method for

regular tax deduction. Enter the result

negative amount.

the regular tax.

on line 2d. If the AMT deduction is

more than the regular tax deduction,

Any other tangible

150% declining

Line 2c. Amortization of

property.

balance method,

enter the difference as a negative

switching to the straight

Mining Exploration and

amount.

line method the first tax

Development Costs

year it gives a larger

Line 2e. Adjusted Gain or

deduction, over the

Loss

property’s AMT class

Do not make this adjustment for

life.

costs for which the corporation

If, during the tax year, the corporation

elected the optional 10-year

disposed of property for which it is

CAUTION

How is the AMT class life

write-off for the regular tax.

making (or previously made) any of the

determined? For property placed in

adjustments described on lines 2a

service before 1999, the class life used

For the AMT, the regular tax

through 2d above, refigure the

for the AMT is not necessarily the same

deductions under sections 616(a) and

property’s adjusted basis for the AMT.

as the recovery period used for the

617(a) are not allowed. Instead,

Then refigure the gain or loss on the

regular tax.

capitalize these costs and amortize

disposition.

them ratably over a 10-year period

The class lives are listed in Rev.

The property’s adjusted basis for the

beginning with the tax year in which the

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

AMT is its cost minus all applicable

corporation paid or incurred them. The

Proc. 88-22, 1988-1 C.B. 785, and in

depreciation or amortization deductions

10-year amortization applies to 100% of

Pub. 946, How To Depreciate Property.

allowed for the AMT during the current

the mining development and

tax year and previous tax years.

See Pub. 946 for tables that can

exploration costs paid or incurred

Subtract this AMT basis from the sales

be used to figure AMT

TIP

during the tax year. Do not reduce the

price to get the AMT gain or loss.

depreciation. Rev. Proc. 89-15,

corporation’s AMT basis by the 30%

1989-1 C.B. 816, and Pub. 946 have

Dispositions for which line 2i, 2j, and

section 291 adjustment that applied for

special rules for short tax years and for

2k adjustments are made. The

the regular tax.

property disposed of before the end of

corporation may also have gains or

the recovery period.

If the corporation had a loss on

losses from lines 2i, 2j, and 2k that

property for which mining exploration

must be considered on line 2e. For

How Is the Line 2a Adjustment

and development costs have not been

example, if for the regular tax the

Figured?

fully amortized for the AMT, the AMT

corporation reports a loss from the

Subtract the AMT deduction for

deduction is the smaller of (a) the loss

disposition of an asset used in a

depreciation from the regular tax

allowable for the costs had they

passive activity, include the loss in the

deduction and enter the result on line

computations for line 2j to determine if

remained capitalized or (b) the

2a. If the AMT deduction is more than

any passive activity loss is limited for

remaining costs to be amortized for the

the regular tax deduction, enter the

the AMT. Then, include the AMT

AMT.

difference as a negative amount.

passive activity loss allowed that relates

Subtract the AMT deduction from the

In addition to the AMT adjustment to

to the disposition of the asset on line 2e

regular tax deduction. Enter the result

the deduction for depreciation, also

in determining the corporation’s AMT

on line 2c. If the AMT deduction is more

adjust the amount of depreciation that

basis adjustment. It may be helpful to

than the regular tax deduction, enter

was capitalized, if any, to account for

refigure the following for the AMT: Form

the difference as a negative amount.

the difference between the rules for the

8810 and related worksheets, Schedule

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Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2011 Page 3

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