Instructions For Alternative Minimum Tax - Corporations Form 4626

enter on Form 4626, line 11, the

the ACE depreciation is the same as

Line 13

the AMT depreciation. Therefore, enter

smaller of:

•

Enter the corporation’s regular tax

on line 2b(1) the same depreciation

90% of Form 4626, line 10, or

•

liability (as defined in section 26(b))

expense you included on line 2a of this

The amount from the AMT Form

minus any foreign tax credit and

worksheet for such property.

1118, Schedule B, Part III, line 13.

possessions tax credit (for example, for

Line 2b(2). Post-1989, pre-1994

Form 1120: Schedule J, line 3, minus

If Form 4626, line 6, has an amount

property. For property placed in

the sum of Schedule J, lines 6a and

entered or the exception for IDCs

service in a tax year that began after

6b). Do not include any:

applies to the corporation, complete the

1989 and before 1994, use the ADS

•

Tax on nondeductible portion of

following steps.

depreciation described in section

qualifying dividends from a controlled

168(g). However, for property (a)

1. Refigure what the tax on line 10

foreign corporation reported on Form

placed in service in a tax year that

would have been if line 6 were zero and

8895,

began after 1989 and (b) described in

the exception did not apply.

•

Tax on accumulation distribution of

sections 168(f)(1) through (4), use the

2. Multiply that amount by 10%.

trusts from Form 4970,

same depreciation claimed for the

•

3. Subtract the result from the tax

Recapture of investment credit

regular tax and enter it on line 2b(5).

on line 10.

(under section 49(b) or 50(a)) from

Line 2b(3). Pre-1990 MACRS

Form 4255,

4. Enter on Form 4626, line 11, the

•

property. For property placed in

Recapture of low-income housing

smaller of that amount or the amount

service after 1986 (after July 1, 1986, if

credit (under section 42(j) or (k)) from

from the AMT Form 1118, Schedule B,

an election to apply MACRS was made)

Form 8611, or

Part III, line 13.

•

and in a tax year that began before

Recapture of any other credit.

1990 (MACRS property), use the

The corporation can use any

straight line method over the remainder

reasonable method, consistently

of the recovery period for the property

ACE Worksheet

applied, to apportion the disallowed

under the ADS of section 168(g). In

amount among the separate limitation

Instructions

doing so, use the convention that would

categories (including the general

have applied to the property under

limitation income category). Any AMT

section 168(d). For more information

Treatment of Certain

foreign tax credit for each separate

(including an example that illustrates

Ownership Changes

limitation category that the corporation

the application of these rules), see

cannot claim (because of the limitation

If a corporation with a net unrealized

Regulations section 1.56(g)-1(b)(2).

fraction and/or the 90% limit) is treated

built-in loss (within the meaning of

Line 2b(4). Pre-1990 original ACRS

as a credit carryback or carryforward for

section 382(h)) undergoes an

property. For property generally

that limitation category under section

ownership change (within the meaning

placed in service in a tax year that

904(c). (Because these amounts may

of Regulations section 1.56(g)-1(k)(2)),

began after 1980 and before 1987 (to

differ from the amounts that are carried

refigure the adjusted basis of each

which the original ACRS applies), use

back or forward for the regular tax,

asset of the corporation (immediately

the straight line method over the

keep adequate records for both the

after the ownership change). The new

remainder of the recovery period for the

AMT and regular tax.) When carried

adjusted basis of each asset is its

property under ADS. In doing so, use

back or forward, the credit is reported

proportionate share (based on

the convention that would have applied

on Schedule B, Part II, line 4, of the

respective fair market values) of the fair

to the property under section 168(d)

carryover year’s AMT Form 1118 for

market value of the corporation’s assets

(without regard to section 168(d)(3)).

that separate limitation category.

(determined under section 382(h))

For more information (including an

immediately before the ownership

example that illustrates the application

change.

Simplified Limitation

of these rules), see Regulations section

To determine if the corporation has a

Election

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

net unrealized built-in loss immediately

The corporation may elect to use a

Line 2b(5). Property described in

before an ownership change, use the

simplified section 904 limitation to figure

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

aggregate adjusted basis of its assets

its AMTFTC. The corporation must

property described in sections 168(f)(1)

used for figuring its ACE. Also, use

make the election for its first tax year

through (4), use the regular tax

these new adjusted bases for all future

beginning after 1997 for which it claims

depreciation, regardless of when the

ACE calculations (such as depreciation

an AMTFTC. If it does not make the

property was placed in service.

and gain or loss on disposition of an

election for that tax year, it may not

asset).

Line 2b(5) takes priority over

make the election for a later tax year.

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

Line 2. ACE Depreciation

Once made, the election applies to all

2b(4) (that is, for property that is

CAUTION

later tax years and may only be

Adjustment

described in sections 168(f)(1) through

revoked with IRS consent.

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

Line 2a. AMTdepreciation. Generally,

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

the amount entered on this line is the

If the corporation made the election

otherwise apply).

depreciation the corporation claimed for

for each of its AMT separate limitations,

the regular tax (Form 4562, line 22),

the corporation uses its separate

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

modified by the AMT depreciation

limitation income or loss that it

regular tax depreciation for (a) property

adjustments reported on lines 2a and

determined for the regular tax (instead

placed in service before 1981 and (b)

2o of Form 4626.

of refiguring the separate limitation

property placed in service after 1980, in

income or loss for the AMT, as

Line 2b(1). Post-1993 property. For

a tax year that began before 1990, that

described earlier).

property placed in service after 1993,

is excluded from MACRS by section

-8-

Instructions For Alternative Minimum Tax - Corporations Form 4626 - 2004 Page 8

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