Instructions For Alternative Minimum Tax - Corporations Form 4626

revitalization deduction under section

2a. If the AMT deduction is more than

allowable for the costs had they

1400I.

the regular tax deduction, enter the

remained capitalized or (b) the

difference as a negative amount.

remaining costs to be amortized for the

How Is Depreciation Refigured

AMT.

In addition to the AMT adjustment to

for the AMT?

the deduction for depreciation, also

Subtract the AMT deduction from the

Property placed in service after 1998.

adjust the amount of depreciation that

regular tax deduction. Enter the result

Use the same convention and recovery

was capitalized, if any, to account for

on line 2c. If the AMT deduction is more

period used for the regular tax. Use the

than the regular tax deduction, enter

the difference between the rules for the

straight line method for section 1250

the difference as a negative amount.

regular tax and the AMT. Include on

property. Use the 150% declining

this line the current year adjustment to

Line 2d. Amortization of

balance method, switching to the

taxable income, if any, resulting from

Circulation Expenditures

straight line method the first tax year it

the difference.

gives a larger deduction, for other

Line 2b. Amortization of

property.

This adjustment applies only to

Certified Pollution Control

expenditures of a personal

Property placed in service before

holding company for which the

Facilities

1999. Refigure depreciation for the

CAUTION

company did not elect the optional

AMT using ADS, with the same

For facilities placed in service before

3-year write-off under section 59(e) for

convention used for the regular tax.

1999, figure the amortization deduction

the regular tax.

See the table below for the method and

for the AMT using ADS (that is, the

recovery period to use.

For the regular tax, circulation

straight line method over the facility’s

expenditures may be deducted in full

class life). For facilities placed in

when paid or incurred. For the AMT,

Property Placed in Service

service after 1998, figure the

these expenditures must be capitalized

amortization deduction for the AMT

Before 1999

and amortized over 3 years beginning

under MACRS using the straight line

with the tax year in which the

method. Figure the AMT deduction

IF the property is

THEN use the . . .

expenditures were made.

using 100% of the asset’s amortizable

Section 1250

Straight line method

basis. Do not reduce the corporation’s

If the corporation had a loss on

property.

over 40 years.

AMT basis by the 20% section 291

property for which circulation

adjustment that applied for the regular

Tangible property

Straight line method

expenditures have not been fully

tax.

(other than section

over the property’s

amortized for the AMT, the AMT

1250 property)

AMT class life.

deduction is the smaller of (a) the loss

Enter the difference between the

depreciated using

allowable for the expenditures had they

AMT deduction and the regular tax

straight line method

remained capitalized or (b) the

deduction on line 2b. If the AMT

for the regular tax.

remaining expenditures to be amortized

deduction is more than the regular tax

for the AMT.

deduction, enter the difference as a

Any other tangible

150% declining

property.

balance method,

negative amount.

Subtract the AMT deduction from the

switching to straight

regular tax deduction. Enter the result

Line 2c. Amortization of

line method the first

on line 2d. If the AMT deduction is

tax year it gives a

Mining Exploration and

more than the regular tax deduction,

larger deduction,

enter the difference as a negative

Development Costs

over the property’s

amount.

AMT class life.

This adjustment applies only to

Line 2e. Adjusted Gain or

costs for which the corporation

How is the AMT class life

Loss

did not elect the optional

CAUTION

determined? For property placed in

10-year write-off under section 59(e) for

If, during the tax year, the corporation

service before 1999, the class life used

the regular tax.

disposed of property for which it is

for the AMT is not necessarily the same

making (or previously made) any of the

For the AMT, the regular tax

as the recovery period used for the

adjustments described on lines 2a

deductions under sections 616(a) and

regular tax.

through 2d above, refigure the

617(a) are not allowed. Instead,

The class lives are listed in Rev.

property’s adjusted basis for the AMT.

capitalize these costs and amortize

Proc. 87-56, 1987-2 C.B. 674, and in

Then refigure the gain or loss on the

them ratably over a 10-year period

Pub. 946, How To Depreciate Property.

disposition.

beginning with the tax year in which the

corporation paid or incurred them. The

The property’s adjusted basis for the

See Pub. 946 for tables that

10-year amortization applies to 100% of

AMT is its cost minus all applicable

TIP

may be used to figure AMT

the mining development and

depreciation or amortization deductions

depreciation. Rev. Proc. 89-15,

exploration costs paid or incurred

allowed for the AMT during the current

1989-1 C.B. 816, has special rules for

during the tax year. Do not reduce the

tax year and previous tax years.

short tax years and for property

corporation’s AMT basis by the 30%

Subtract this AMT basis from the sales

disposed of before the end of the

section 291 adjustment that applied for

price to get the AMT gain or loss.

recovery period.

the regular tax.

Dispositions for which line 2i, 2j, and

How Is the Line 2a Adjustment

If the corporation had a loss on

2k adjustments are made. The

Figured?

property for which mining exploration

corporation may also have gains or

Subtract the AMT deduction for

and development costs have not been

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

depreciation from the regular tax

fully amortized for the AMT, the AMT

must be considered on line 2e. For

deduction and enter the result on line

deduction is the smaller of (a) the loss

example, if for the regular tax the

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Instructions For Alternative Minimum Tax - Corporations Form 4626 - 2004 Page 3

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