Instructions For Alternative Minimum Tax - Corporations Form 4626

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Department of the Treasury

Internal Revenue Service

Instructions for Form 4626

Alternative Minimum Tax—Corporations

Section references are to the Internal Revenue Code unless otherwise noted.

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The following rules apply when

Enter zero on line 2c of the Adjusted

General Instructions

figuring gross receipts under 2b above.

Current Earnings (ACE) Worksheet on

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Gross receipts must be figured using

page 11. When completing line 5 of the

Purpose of Form

the corporation’s tax accounting

ACE Worksheet, take into account only

method and include total sales (net of

amounts from tax years beginning on or

Use Form 4626 to figure the alternative

returns and allowances), amounts

after the change date. Also, for line 8 of

minimum tax (AMT) under section 55

received for services, and income from

the ACE Worksheet, take into account

for a corporation that is not exempt

investments and other sources. See

only property placed in service on or

from the AMT.

Temporary Regulations section

after the change date.

Consolidated returns. For an

1.448-1T(f)(2)(iv) for more details.

See section 55(e)(3) for exceptions

affiliated group filing a consolidated

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Gross receipts include those of any

related to any item acquired in a

return under the rules of section 1501,

predecessor of the corporation,

corporate acquisition or to any

AMT must be figured on a consolidated

including non-corporate entities.

substituted basis property, if an AMT

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basis.

For a short tax year, gross receipts

provision applied to the item or property

must be annualized by multiplying them

Who Must File

while it was held by the transferor.

by 12 and dividing the result by the

number of months in the tax year.

Once the corporation loses its

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If the corporation is a “small

The gross receipts of all persons

small corporation status, it

corporation” exempt from the

treated as a single employer under

cannot qualify for any

CAUTION

AMT (as explained below), do

CAUTION

section 52(a), 52(b), 414(m), or 414(o)

subsequent tax year.

not file Form 4626.

must be aggregated.

Generally, file Form 4626 if either of

Credit for Prior Year

Loss of small corporation status. If

the following apply.

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the corporation qualified as a small

Minimum Tax

The corporation’s taxable income or

corporation exempt from the AMT for its

(loss) before the net operating loss

A corporation may be able to take a

previous tax year, but does not meet

(NOL) deduction plus its adjustments

minimum tax credit against the regular

the gross receipts test for its tax year

and preferences total more than

tax for AMT incurred in prior years. See

beginning in 2004, it loses its AMT

$40,000 or, if smaller, its allowable

Form 8827, Credit for Prior Year

exemption status. Special rules apply in

exemption amount.

Minimum Tax — Corporations, for

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figuring AMT for the tax year beginning

The corporation claims any general

details.

in 2004 and all later years based on the

business credit, the qualified electric

“change date.” The change date is the

vehicle credit, the nonconventional

Recordkeeping

first day of the corporation’s tax year

source fuel credit, or the credit for prior

beginning in 2004. Where this applies,

Certain items of income, deductions,

year minimum tax.

complete Form 4626 taking into

credits, etc., receive different tax

Exemption for Small

account the following modifications.

treatment for the AMT than for the

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The adjustments for depreciation and

regular tax. Therefore, the corporation

Corporations

amortization of pollution control facilities

should keep adequate records to

A corporation is treated as a small

apply only to property placed in service

support items refigured for the AMT.

corporation exempt from the AMT for its

on or after the change date.

Examples include:

current tax year beginning in 2004 if:

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The adjustment for mining

Tax forms completed a second time

1. The current year is the

exploration and development costs

to refigure the AMT;

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corporation’s first tax year in existence

applies only to amounts paid or

The computation of a carryback or

(regardless of its gross receipts for the

incurred on or after the change date.

carryforward to other tax years of

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year), or

The adjustment for long-term

certain deductions or credits (for

2. Both of the following apply.

contracts applies only to contracts

example, net operating loss, capital

entered into on or after the change

a. It was treated as a small

loss, and foreign tax credit) if the AMT

date.

corporation exempt from the AMT for all

amount is different from the regular tax

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When figuring the amount to enter on

prior tax years beginning after 1997.

amount;

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b. Its average annual gross receipts

line 6, for any loss year beginning

The computation of a carryforward of

before the change date, use the

for the 3-tax-year period (or portion

a passive loss or tax shelter farm

thereof during which the corporation

corporation’s regular tax NOL for that

activity loss if the AMT amount is

year.

was in existence) ending before its tax

different from the regular tax amount;

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year beginning in 2004 did not exceed

Figure the limitation on line 4d only

and

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$7.5 million ($5 million if the corporation

for prior tax years beginning on or after

A “running balance” of the excess of

had only 1 prior tax year).

the change date.

the corporation’s total increases in

Cat. No. 64443L

Instructions For Alternative Minimum Tax - Corporations Form 4626 - 2004

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