Instructions For Alternative Minimum Tax - Corporations Form 4626

allowable for the year because of the

Line 2n. Intangible Drilling

Line 2o. Other Adjustments

limitations above.

Costs

And Preferences

Enter on line 2k the excess of the

Enter the net amount of any other

This preference applies only to

adjustments and preferences, including

loss limited for the AMT over the loss

costs for which the corporation

the following.

limited for the regular tax. If the loss

did not elect the optional

CAUTION

limited for the regular tax is more than

Income eligible for the possessions

60-month write-off for the regular tax.

the loss limited for the AMT, enter the

tax credit. If this income was included

difference as a negative amount.

Intangible drilling costs (IDCs) from

in the corporation’s taxable income for

oil, gas, and geothermal properties are

the regular tax, include this amount on

Line 2l. Depletion

a preference to the extent excess IDCs

line 2o as a negative amount.

exceed 65% of the net income from the

Refigure depletion using only income

Income from the alcohol fuel credit.

properties. Figure the preference for all

and deductions allowed for the AMT

If this income was included in the

geothermal deposits separately from

when refiguring the limit based on

corporation’s income for the regular tax,

the preference for all oil and gas

taxable income from the property under

include this amount on line 2o as a

properties that are not geothermal

negative amount.

section 613(a) and the limit based on

deposits.

taxable income, with certain

Income as the beneficiary of an

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

Excess IDCs are the excess of:

estate or trust. If the corporation is the

•

Also, the depletion deduction for mines,

beneficiary of an estate or trust, include

The amount of IDCs the corporation

wells, and other natural deposits is

on line 2o the minimum tax adjustment

paid or incurred for oil, gas, or

limited to the property’s adjusted basis

from Schedule K-1 (Form 1041), line 9.

geothermal properties that it elected to

at the end of the year, as refigured for

expense for the regular tax (not

Net AMT adjustment from an electing

the AMT, unless the corporation is an

including any deduction for

large partnership. If the corporation

independent producer or royalty owner

nonproductive wells) reduced by the

is a partner in an electing large

claiming percentage depletion for oil

section 291(b)(1) adjustment for

partnership, include on line 2o the

and gas wells. Figure this limit

integrated oil companies and increased

amount from Schedule K-1 (Form

separately for each property. When

by any amortization of IDCs allowed

1065-B), box 6. Also include on line 2o

refiguring the property’s adjusted basis,

under section 291(b)(2) over

any amount from Schedule K-1 (Form

•

take into account any AMT adjustments

The amount that would have been

1065-B), box 5, unless the corporation

the corporation made this year or in

allowed if the corporation had

is a closely held or personal service

previous years that affect basis (other

amortized that amount over a

corporation. Closely held and personal

than the current year’s depletion). Do

120-month period starting with the

service corporations should take any

not include in the property’s adjusted

month the well was placed in

amount from box 5 into account when

basis any unrecovered costs of

production or, alternatively, had elected

figuring the amount to enter on line 2j.

depreciable tangible property used to

any method that is permissible in

Patron’s AMT adjustment.

exploit the deposits (for example,

determining cost depletion.

Distributions the corporation received

machinery, tools, pipes, etc.).

from a cooperative may be includible in

Net income is the gross income the

income. Unless the distributions are

corporation received or accrued from all

For iron ore and coal (including

nontaxable, include on line 2o the total

oil, gas, and geothermal wells minus

lignite), apply the section 291

AMT patronage dividend adjustment

the deductions allocable to these

adjustment before figuring this

reported to the corporation from the

properties (reduced by the excess

preference.

cooperative.

IDCs). When refiguring net income, use

only income and deductions allowed for

Enter on line 2l the difference

Cooperative’s AMT adjustment. If the

the AMT.

between the regular tax and the AMT

corporation is a cooperative, refigure

deduction. If the AMT deduction is

the cooperative’s deduction for

Exception. The preference for IDCs

more than the regular tax deduction,

patronage dividends by taking into

from oil and gas wells does not apply to

enter the difference as a negative

account the cooperative’s AMT

corporations that are independent

amount.

adjustments and preferences. Subtract

producers (that is, not integrated oil

the cooperative’s AMT deduction for

companies as defined in section

patronage dividends from its regular tax

Line 2m. Tax-Exempt Interest

291(b)(4)). However, this benefit may

deduction for patronage dividends and

Income From Specified

be limited. First, figure the IDC

include the result on line 2o. If the AMT

preference as if this exception did not

Private Activity Bonds

deduction is more than the regular tax

apply. Then, for purposes of this

deduction, include the result as a

Enter interest income from specified

exception, complete a second Form

negative amount.

private activity bonds, reduced by any

4626 through line 5, including the IDC

deduction that would have been

preference. If the amount of the IDC

Installment sales. The installment

allowable if the interest were includible

preference exceeds 40% of the amount

method does not apply for the AMT to

in gross income for the regular tax.

figured for line 5, enter the excess on

any nondealer disposition of property

Generally, a specified private activity

line 2n (the benefit of this exception is

that occurred after August 16, 1986, but

bond is any private activity bond (as

limited). If the amount of the IDC

before the first day of the corporation’s

defined in section 141) issued after

preference is equal to or less than 40%

tax year that began in 1987, if an

August 7, 1986, on which the interest is

of the amount figured for line 5, do not

installment obligation to which the

not includible in gross income for the

include an amount on line 2n for oil and

proportionate disallowance rule applied

regular tax. See section 57(a)(5) for

gas wells (the benefit of this exception

arose from the disposition. Include as a

exceptions and details.

is not limited).

negative adjustment on line 2o the

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Instructions For Alternative Minimum Tax - Corporations Form 4626 - 2004 Page 5

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