Instructions For Form 4626 - Alternative Minimum Tax-Corporations

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

or loss using the rules for the regular

An AMT loss that exceeds the

or Form 4797.

tax with the following modifications.

regular tax loss, or

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No loss is allowed except to the

A regular tax gain that exceeds the

Enter on line 2e the difference

extent the personal service corporation

AMT gain.

between the regular tax gain or loss

is insolvent.

and the AMT gain or loss. Enter the

Tax Shelter Farm Activities That

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Do not use a loss in the current tax

difference as a negative amount if any

Are Passive Activities

year to offset gains from other tax

of the following apply.

Refigure all gains and losses reported

shelter farm activities. Instead, suspend

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The AMT gain is less than the regular

for the regular tax by taking into

any loss and carry it forward indefinitely

tax gain.

account the corporation’s AMT

until the corporation has a gain in a

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The AMT loss exceeds the regular

adjustments and preferences and AMT

subsequent tax year from that same tax

tax loss.

prior year unallowed losses.

shelter farm activity or it disposes of the

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The corporation has an AMT loss

activity.

Use the same rules as outlined

and a regular tax gain.

above for other passive activities, with

Keep adequate records for

Line 2f. Long-Term Contracts

the following modifications.

losses that are not deductible

TIP

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AMT gains from tax shelter farm

For the AMT, the corporation generally

(and therefore carried forward)

activities that are passive activities may

must use the percentage-of-completion

for both the AMT and regular tax.

be used to offset AMT losses from

method described in section 460(b) to

Enter on line 2i the difference

other passive activities.

determine the taxable income from any

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between the AMT gain or loss and the

AMT losses from tax shelter farm

long-term contract (defined in section

regular tax gain or loss. Enter the

activities that are passive activities may

460(f)). However, this rule does not

difference as a negative amount if the

not be used to offset AMT gains from

apply to any home construction contract

corporation had:

other passive activities. These losses

(as defined in section 460(e)(6)).

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An AMT loss and a regular tax gain,

must be suspended and carried forward

For contracts excepted from the

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An AMT loss that exceeds the

indefinitely until the corporation has a

percentage-of-completion method for

regular tax loss, or

gain in a subsequent year from that

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the regular tax by section 460(e)(1),

A regular tax gain that exceeds the

same activity or it disposes of the

determine the percentage of completion

AMT gain.

activity.

using the simplified procedures for

Line 2j. Passive Activities

Line 2k. Loss Limitations

allocating costs outlined in section

460(b)(3).

Refigure gains and losses reported for

This adjustment applies only to

Subtract the regular tax income from

the regular tax from at-risk activities

closely held corporations and

the AMT income. Enter the difference

and the corporation’s share of

personal service corporations.

on line 2f. If the AMT income is less

distributive items from partnerships by

CAUTION

than the regular tax income, enter the

taking into account the corporation’s

Refigure all passive activity gains

difference as a negative amount.

AMT adjustments and preferences. If

and losses reported for the regular tax

the corporation has recomputed losses

by taking into account the corporation’s

Line 2g. Merchant Marine

that must be limited for the AMT by

AMT adjustments and preferences and

Capital Construction Funds

section 465 or section 704(d) or the

AMT prior year unallowed losses that

corporation reported losses for the

Amounts deposited in these funds are

apply to that activity.

regular tax from at-risk activities or

not deductible for the AMT. Earnings on

Determine the corporation’s AMT

distributive shares of partnership losses

these funds must be included in gross

passive activity gain or loss using the

that were limited by those sections,

income for the AMT. If the corporation

same rules used for the regular tax.

figure the difference between the loss

deducted these amounts or excluded

Generally, no loss is allowed. However,

limited for the AMT and the loss limited

them from income for the regular tax,

if the corporation is insolvent, special

for the regular tax for each applicable

add them back on line 2g.

rules apply. See section 58(c).

at-risk activity or distributive share of

Line 2h. Section 833(b)

partnership loss. “Loss limited” means

Disallowed losses of a personal

the amount of loss that is not allowable

Deduction

service corporation are suspended until

for the year because of the limitations

the corporation has income from that

This deduction is not allowed for the

above.

(or any other) passive activity or until

AMT. If the corporation took this

the passive activity is disposed of (that

Enter on line 2k the excess of the

deduction for the regular tax, add it

is, its passive losses cannot offset “net

loss limited for the AMT over the loss

back on line 2h.

active income” (defined in section

limited for the regular tax. If the loss

469(e)(2)(B) or “portfolio income”)).

limited for the regular tax is more than

Line 2i. Tax Shelter Farm

Disallowed losses of a closely held

the loss limited for the AMT, enter the

Activities

corporation that is not a personal

difference as a negative amount.

service corporation are treated the

Line 2l. Depletion

Complete this line only if the

same except that, in addition, they may

corporation is a personal service

be used to offset “net active income.”

Refigure depletion using only income

corporation and it has a gain or

and deductions allowed for the AMT

CAUTION

Keep adequate records for

loss from a tax shelter farm activity that

when refiguring the limit based on

losses that are not deductible

is not a passive activity. If the tax

TIP

taxable income from the property under

(and therefore carried forward)

shelter farm activity is a passive

section 613(a) and the limit based on

activity, include the gain or loss in the

for both the AMT and regular tax.

taxable income, with certain

computations for line 2j.

Enter on line 2j the difference

adjustments, under section 613A(d)(1).

Refigure all gains and losses

between the AMT gain or loss and the

Also, the depletion deduction for mines,

reported for the regular tax from tax

regular tax gain or loss. Enter the

wells, and other natural deposits is

shelter farm activities by taking into

difference as a negative amount if the

limited to the property’s adjusted basis

account any AMT adjustments and

corporation had:

at the end of the year, as refigured for

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preferences. Determine the AMT gain

An AMT loss and a regular tax gain,

the AMT, unless the corporation is an

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Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2011 Page 4

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