Instructions For Form 4626 - Alternative Minimum Tax-Corporations

dividends-received deduction for those

Simplified Limitation

To determine if the corporation has a

dividends is disallowed under the ACE

net unrealized built-in loss immediately

Election

before an ownership change, use the

rules.

The corporation may elect to use a

aggregate adjusted basis of its assets

In determining if any income is

simplified section 904 limitation to figure

used for figuring its ACE. Also, use

“high-taxed” in applying the separate

its AMTFTC. The corporation must

these new adjusted bases for all future

limitation categories, use the AMT rate

make the election for its first tax year

ACE calculations (such as depreciation

(20%) instead of the regular tax rate.

beginning after 1997 for which it claims

and gain or loss on disposition of an

2. For each separate AMT Form

an AMTFTC. If it does not make the

asset).

1118, if the corporation previously

election for that tax year, it may not

Line 2. ACE Depreciation

made or is making the simplified

make the election for a later tax year.

limitation election (discussed below),

Adjustment

Once made, the election applies to all

skip Schedule A and enter on Schedule

later tax years and may only be

Line 2a. AMT depreciation.

B, Part II, line 7, the same amount you

revoked with IRS consent.

Generally, the amount entered on this

entered on that line for the regular tax.

line is the depreciation the corporation

If the corporation made the election

Otherwise, complete Schedule A using

claimed for the regular tax (Form 4562,

for each of its AMT separate limitations,

only income and deductions that are

line 22), modified by the AMT

the corporation uses its separate

allowed for the AMT and attributable to

depreciation adjustments reported on

limitation income or loss that it

sources outside the United States.

lines 2a and 2o of Form 4626.

determined for the regular tax (instead

3. For each separate AMT Form

of refiguring the separate limitation

Line 2b(1). Post-1993 property. For

1118, complete Schedule B, Part II.

income or loss for the AMT, as

property placed in service after 1993,

Enter any AMTFTC carryover on

described earlier).

the ACE depreciation is the same as

Schedule B, Part II, line 5. Enter the

the AMT depreciation. Therefore, enter

AMTI from Form 4626, line 7, on

Line 13

on line 2b(1) the same depreciation

Schedule B, Part II, line 8a. Enter the

expense you included on line 2a of this

amount from Form 4626, line 10, on

Enter the corporation’s regular tax

worksheet for such property.

Schedule B, Part II, line 10. When

liability (as defined in section 26(b))

Line 2b(2). Post-1989, pre-1994

completing Schedule B, treat as a tax

minus any foreign tax credit and minus

property. For property placed in

paid to a foreign country 75% of any

any American Samoa economic

service in a tax year that began after

withholding or income tax paid to

development credit (for example, Form

1989 and before 1994, use the ADS

American Samoa on dividends received

1120, Schedule J, line 2; minus any

depreciation described in section

from a corporation that qualifies for the

foreign tax credit entered on Schedule

168(g). However, for property (a)

American Samoa economic

J, line 5a; and minus any American

placed in service in a tax year that

development credit (if the

Samoa economic development credit

began after 1989 and (b) described in

dividends-received deduction for those

from Form 5735 included on Schedule

sections 168(f)(1) through (4), use the

dividends is disallowed under the ACE

J, line 5b). Do not include any:

same depreciation claimed for the

rules).

•

Tax on accumulation distribution of

regular tax and enter it on line 2b(5).

4. For the AMT Form 1118,

trusts from Form 4970,

Line 2b(3). Pre-1990 MACRS

complete Schedule B, Part III,

•

Recapture of investment credit

property. For MACRS property

Summary of Separate Credits. The total

(under section 49(b) or 50(a)) from

generally placed in service after 1986

foreign tax credit is the amount on line

Form 4255,

and in a tax year that began before

•

Recapture of low-income housing

1990, figure depreciation by using the

5. Enter on Form 4626, line 11, the

credit (under section 42(j) or (k)) from

property’s AMT adjusted basis as of the

smaller of:

Form 8611, or

close of the last tax year beginning

•

The amount on Form 4626, line

Recapture of any other credit.

before 1990 and by using the straight

10, or

line method over the remainder of the

•

The amount from the AMT Form

recovery period for the property under

1118, Schedule B, Part III, line 6.

Adjusted Current

ADS. In doing so, use the convention

that would have applied to the property

Earnings (ACE)

under section 168(d). For more

The corporation can use any

information (including an example that

reasonable method, consistently

Worksheet Instructions

illustrates the application of these

applied, to apportion the disallowed

rules), see Regulations section

amount among the separate limitation

Treatment of Certain

1.56(g)-1(b)(2).

categories (including the general

Ownership Changes

limitation income category). Any AMT

Line 2b(4). Pre-1990 original ACRS

foreign tax credit for each separate

If a corporation with a net unrealized

property. For ACRS property

limitation category that the corporation

built-in loss (within the meaning of

generally placed in service in a tax year

cannot claim (because of the limitation

section 382(h)) undergoes an

that began after 1980 and before 1987,

fraction) is treated as a credit carryback

ownership change (within the meaning

figure depreciation by using the

or carryforward for that limitation

of section 382(g) and Regulations

property’s regular tax adjusted basis as

category under section 904(c). Because

section 1.56(g)-1(k)(2)), refigure the

of the close of the last tax year

these amounts may differ from the

adjusted basis of each asset of the

beginning before 1990 and by using the

amounts that are carried back or

corporation (immediately after the

straight line method over the remainder

forward for the regular tax, keep

ownership change). The new adjusted

of the recovery period for the property

adequate records for both the AMT and

basis of each asset is its proportionate

under ADS. In doing so, use the

regular tax. When carried back or

share (based on respective fair market

convention that would have applied to

forward, the credit is reported on

values) of the fair market value of the

the property under section 168(d)

Schedule B, Part II, line 5, of the

corporation’s assets (determined under

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

carryover year’s AMT Form 1118 for

section 382(h)) immediately before the

For more information (including an

that separate limitation category.

ownership change.

example that illustrates the application

-8-

Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2011 Page 8

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