Instructions For Alternative Minimum Tax - Corporations Form 4626

its potential negative ACE adjustment

regard to the ATNOLD, use a second

Line 11. Alternative

because that amount is less than its

Form 4626 as a worksheet. Complete

line 4d limit of $225,000.

the second Form 4626 through line 5,

Minimum Tax Foreign

but when figuring lines 2l and 2o, treat

In 2003, Corporation C was allowed

Tax Credit (AMTFTC)

line 6 as if it were zero. The amount

to reduce its AMTI by only $150,000. Its

figured on line 5 of the second Form

potential negative ACE adjustment of

The AMTFTC is the foreign tax credit

4626 is the corporation’s AMTI

$300,000 was limited to its 2001

refigured as follows.

determined without regard to the

increase in AMTI of $225,000 minus its

1. Complete a separate AMT Form

ATNOLD.

2002 reduction in AMTI of $75,000.

1118, Foreign Tax Credit —

In 2004, Corporation C must

Corporations, for each separate

The ATNOL may be carried back or

increase its AMTI by the full amount of

limitation category specified at the top

forward using the rules outlined in

its potential ACE adjustment. It cannot

of Form 1118. Include as a separate

section 172(b). An election under

use any part of its 2003 unallowed

limitation category dividends received

section 172(b)(3) to forego the

potential negative ACE adjustment of

from a corporation that qualifies for the

carryback period for the regular tax also

$150,000 to reduce its 2004 positive

possessions tax credit if the

applies for the AMT.

ACE adjustment of $112,500.

dividends-received deduction for those

Corporation C would complete the

The ATNOL carried back or forward

dividends is disallowed under the ACE

relevant portion of its 2004 Form 4626

may differ from the NOL (if any) that is

rules.

as follows.

carried back or forward for the regular

In determining if any income is

tax. Keep adequate records for both the

“high-taxed” in applying the separate

Line

Amount

AMT and the regular tax.

limitation categories, use the AMT rate

$250,000

(20%) instead of the regular tax rate.

150,000

Line 7. Alternative

2. For each separate AMT Form

112,500

1118, if the corporation previously

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Minimum Taxable

made or is making the simplified

112,500

limitation election (discussed on page

Income

8), skip Schedule A and enter on

For a corporation that held a residual

Line 6. Alternative Tax

Schedule B, Part II, line 6, the same

interest in a REMIC and is not a thrift

amount you entered on that line for the

Net Operating Loss

institution, line 7 may not be less than

regular tax. Otherwise, complete

the total of the amounts shown on

Schedule A using only income and

Deduction (ATNOLD)

Schedule(s) Q (Form 1066), Quarterly

deductions that are allowed for the

Notice to Residual Interest Holder of

The ATNOLD is the sum of the ATNOL

AMT and attributable to sources outside

REMIC Taxable Income or Net Loss

carrybacks and carryforwards to the tax

the United States.

Allocation, line 2c, for the periods

year, subject to the limitation explained

3. For each separate AMT Form

included in the corporation’s tax year. If

below. For a corporation that held a

1118, complete Schedule B, Part II.

the total of the line 2c amounts is larger

residual interest in a real estate

Enter any AMTFTC carryover on

than the amount the corporation would

mortgage investment conduit (REMIC),

Schedule B, Part II, line 4. Enter the

otherwise enter on line 7, enter that

figure the ATNOLD without regard to

AMTI from Form 4626, line 7, on

total and write “Sch. Q” on the dotted

any excess inclusion.

Schedule B, Part II, line 7a. Enter the

line next to line 7.

amount from Form 4626, line 10, on

NOLs arising in tax years

Schedule B, Part II, line 9.

beginning before August 6,

Line 8. Exemption

1997, may be carried forward no

CAUTION

When completing Schedule B, treat

more than 15 years. Therefore, the

as a tax paid to a foreign country 75%

Phase-Out Computation

corporation may not carry forward an

of any withholding or income tax paid to

NOL to this tax year from a loss year

Line 8a. If this Form 4626 is for a

a U.S. possession on dividends

beginning before 1989.

member of a controlled group of

received from a corporation that

corporations, subtract $150,000 from

qualifies for the possessions tax credit

The ATNOL for a loss year is the

the combined AMTI of all members of

(if the dividends-received deduction for

excess of the deductions allowed in

the controlled group. Divide the result

those dividends is disallowed under the

figuring AMTI (excluding the ATNOLD)

among the members of the group in the

ACE rules).

over the income included in AMTI. This

same manner as the $40,000 tentative

excess is figured with the modifications

4. For the AMT Form 1118,

exemption is divided among the

in section 172(d), taking into account

complete Schedule B, Part III,

members. Enter this member’s share

the adjustments in sections 56 and 58

Summary of Separate Credits. The total

on line 8a. The tentative exemption

and preferences in section 57 (that is,

foreign tax credit on line 13 is limited to

must be divided equally among the

the section 172(d) modifications must

the tax on Form 4626, line 10, minus

members, unless all members consent

be separately figured for the ATNOL).

10% of the tax that would be on that

to a different allocation. See section

line if Form 4626 were refigured using

In applying the rules relating to the

1561 for details.

zero on line 6 and without regard to the

determination of the amount of

exception for intangible drilling costs

carrybacks and carryforwards, use the

Line 8c. If this Form 4626 is for a

(IDCs) under section 57(a)(2)(E).

modification to those rules described in

member of a controlled group of

section 56(d)(1)(B)(ii).

corporations, reduce the member’s

The ATNOLD is limited to 90% of

share of the $40,000 tentative

If there is no entry on Form 4626,

line 6, and no IDCs (or the exception

AMTI determined without regard to the

exemption by the amount entered on

ATNOLD. To figure AMTI without

line 8b.

does not apply to the corporation),

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Instructions For Alternative Minimum Tax - Corporations Form 4626 - 2004 Page 7

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