Instructions For Form 4626 - Alternative Minimum Tax-Corporations

of these rules), see Regulations section

shareholder) on the liquidation or

An item is considered taken into

1.56(g)-1(b)(3).

disposal of a business.

account without regard to the timing of

its deductibility in figuring

Exceptions. Do not make an

Line 2b(5). Property described in

pre-adjustment AMTI or E&P.

adjustment for the following.

sections 168(f)(1) through (4). For

Therefore, only deduction items that are

•

Any income from discharge of

this property, use the regular tax

permanently disallowed in figuring E&P

indebtedness excluded from gross

depreciation, regardless of when the

are disallowed in figuring ACE.

income under section 108 (or the

property was placed in service.

Items for which no adjustment is

corresponding provision of prior law).

•

necessary. Generally, no deduction is

Line 2b(5) takes priority over

Any extraterritorial income excluded

lines 2b(1), 2b(2), 2b(3), and

allowed for an item in figuring ACE if

from gross income under repealed

2b(4). For property that is

the item is not deductible in figuring

section 114.

CAUTION

•

described in sections 168(f)(1) through

pre-adjustment AMTI (even if the item

For an insurance company taxed

(4), use line 2b(5) instead of the line

is deductible in figuring E&P). The only

under section 831(b), any amount not

2b(1), 2b(2), 2b(3), or 2b(4) that would

exceptions to this general rule are the

included in gross investment income

otherwise apply.

related reductions to an income item

(as defined in section 834(b)).

•

described in the second sentence of

Any special subsidy payment for

Line 2b(6). Other property. Use the

the instructions for line 3 above.

prescription drug plans excluded from

regular tax depreciation for (a) property

Deductions that are not allowed in

gross income under section 139A.

placed in service before 1981 and (b)

•

figuring ACE include:

Any qualified shipping income

property placed in service after 1980, in

•

Capital losses that exceed capital

excluded under section 1357.

a tax year that began before 1990, that

•

gains;

Tax-exempt interest on certain

is excluded from MACRS by section

•

Bribes, fines, and penalties

housing bonds issued after July 30,

168(f)(5)(A)(i) or original ACRS by

disallowed under section 162;

2008, excluded under section

section 168(e)(4), as in effect before

•

Charitable contributions that exceed

57(a)(5)(C)(iii).

the Tax Reform Act of 1986.

•

the limitations of section 170;

Tax-exempt interest on certain

•

Line 2c. Total ACE depreciation.

Meals and entertainment expenses

private activity bonds issued after

that exceed the limitations of section

Subtract line 2b(7) from line 2a and

December 31, 2008, and before

274;

enter the result on line 2c. If line 2b(7)

January 1, 2011. Special rules apply to

•

Federal taxes disallowed under

exceeds line 2a, enter the difference as

refunding bonds. See section

section 275; and

a negative amount.

56(g)(4)(B)(iv).

•

Golden parachute payments that

Line 3d. Include in ACE the income

Line 3. Inclusion in ACE of

exceed the limitation of section 280G.

on life insurance contracts (as

Items Included in Earnings and

Line 4e. Do not include any

determined under section 7702(g)) for

Profits (E&P)

adjustment related to the E&P effects of

the tax year minus the part of any

any charitable contribution.

In general, any income item that is not

premium attributable to insurance

taken into account (see below) in

coverage.

Line 5. Other Adjustments

determining the corporation’s

Line 3e. Do not include any

pre-adjustment AMTI but that is taken

Line 5a. Except as noted below, in

adjustment related to the E&P effects of

into account in determining its E&P

figuring ACE, determine the deduction

any charitable contribution.

must be included in ACE. Any such

for intangible drilling costs under

income item can be reduced by all

Line 4. Disallowance of Items

section 312(n)(2)(A).

items related to that income item and

Not Deductible From E&P

Subtract the ACE expense (if any)

that would be deductible when figuring

from the AMT expense (used to figure

Generally, no deduction is allowed

pre-adjustment AMTI if the income

line 2n of Form 4626) and enter the

when figuring ACE for items not taken

items to which they relate were

result on line 5a. If the ACE expense

into account (see below) in figuring

included in the corporation’s

exceeds the AMT amount, enter the

E&P for the tax year. These amounts

pre-adjustment AMTI for the tax year.

result as a negative amount.

increase ACE if they are deductible in

Examples of these income items and

figuring pre-adjustment AMTI (that is,

Exception. The above rule does not

the adjustments that relate to them

they would be positive adjustments).

apply to amounts paid or incurred for

include:

•

any oil or gas well by corporations that

Interest income from tax-exempt

However, there are exceptions. Do

are independent producers (that is, not

obligations excluded under section 103

not add back:

•

integrated oil companies as defined in

minus any costs incurred in carrying

Any deduction allowable under

section 291(b)(4)). If this exception

these tax-exempt obligations and

section 243 or 245 for any dividend that

•

applies, do not enter an amount on line

Proceeds of life insurance contracts

qualifies for a 100% dividends-received

5a for oil and gas wells.

excluded under section 101 minus the

deduction under section 243(a), 245(b),

basis in the contract for purposes of

or 245(c) and

Line 5b. When figuring ACE, the

•

ACE.

Any dividend received from a

current year deduction for circulation

20%-owned corporation (see section

expenditures under section 173 does

An income item is considered taken

243(c)(2)), but only if the dividend is

not apply. Therefore, treat circulation

into account without regard to the

from income of the paying corporation

expenditures for ACE using the case

timing of its inclusion in a corporation’s

that is subject to federal income tax.

law that existed before section 173 was

pre-adjustment AMTI or its E&P. Only

•

Any allowable domestic production

enacted.

income items that are permanently

activities deduction under section 199.

excluded from pre-adjustment AMTI are

Subtract the ACE expense (if any)

included in ACE. An income item will

Special rules apply to:

from the regular tax expense (for a

•

not be considered taken into account

Dividends from certain possession

personal holding company, from the

merely because the proceeds from that

corporations operating in American

AMT expense used to figure line 2d of

item might eventually be reflected in the

Samoa.

Form 4626) and enter the result on line

•

pre-adjustment AMTI of another

Certain dividends received by certain

5b. If the ACE expense exceeds the

taxpayer (for example, that of a

cooperatives.

regular tax amount (for a personal

-9-

Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2011 Page 9

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