Instructions For Form 4626 - 2001 (Page 2 of 11) in pdf

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The computation of a carryback or

Form 8827, Credit for Prior Year

What Depreciation Must Be

carryforward to other tax years of

Minimum Tax — Corporations, for

Refigured for the AMT?

certain deductions or credits (e.g., net

details.

Generally, the corporation must refigure

operating loss, capital loss, and foreign

depreciation for the AMT, including

tax credit) if the AMT amount is

Optional Write-Off for

depreciation allocable to inventory

different from the regular tax amount;

costs, for:

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The computation of a carryforward of

Certain Expenditures

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Property placed in service after 1998

a passive loss or tax shelter farm

There is no AMT adjustment for the

depreciated for the regular tax using

activity loss if the AMT amount is

following items if the corporation elects

the 200% declining balance method

different from the regular tax amount;

to deduct them ratably over the period

(generally 3-, 5-, 7-, or 10-year property

and

of time shown for the regular tax.

under the modified accelerated cost

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A “running balance” of the excess of

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recovery system (MACRS));

Circulation expenditures (personal

the corporation’s total increases in

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Section 1250 property placed in

holding companies) — 3 years (section

AMTI from prior year adjusted current

173).

service after 1998 that is not

earnings (ACE) adjustments over the

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depreciated for the regular tax using

Mining exploration and development

total reductions in AMTI from prior year

the straight line method; and

costs — 10 years (sections 616(a) and

ACE adjustments (see the instructions

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Tangible property placed in service

617(a)).

for line 4d).

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after 1986 and before 1999. (If the

Intangible drilling costs — 60 months

transitional election was made under

Short Period Return

(section 263(c)).

section 203(a)(1)(B) of the Tax Reform

See section 59(e) for more details.

If the corporation is filing for a period of

Act of 1986, this rule applies to property

less than 12 months, AMTI must be

placed in service after July 31, 1986.)

placed on an annual basis and the AMT

prorated based on the number of

What Depreciation Is Not

Specific Instructions

months in the short period. Complete

Refigured for the AMT?

Form 4626 as follows.

Do not refigure depreciation for the

1. Complete lines 1 through 6 in the

Line 1—Taxable Income

AMT for the following.

normal manner. Subtract line 6 from

•

Residential rental property placed in

or (Loss) Before Net

line 5 to figure AMTI for the short

service after 1998.

period, but do not enter it on line 7.

•

Nonresidential real property with a

Operating Loss

2. Multiply AMTI for the short period

class life of 27.5 years or more

by 12. Divide the result by the number

Deduction

(generally, a building and its structural

of months in the short period. Enter this

components) placed in service after

Enter the corporation’s taxable income

result on line 7 and write “Sec.

1998 that is depreciated for the regular

or (loss) before the NOL deduction and

443(d)(1)” on the dotted line to the left

tax using the straight line method.

after the special deductions and without

of the entry space.

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Other section 1250 property placed

regard to any excess inclusion (e.g., if

3. Complete lines 8 through 12.

in service after 1998 that is depreciated

filing Form 1120, subtract line 29b from

4. Subtract line 12 from line 11.

for the regular tax using the straight line

line 28 of that form).

Multiply the result by the number of

method.

months in the short period and divide

•

Property (other than section 1250

that result by 12. Enter the final result

Line 2—Adjustments

property) placed in service after 1998

on line 13 and write “Sec. 443(d)(2)” on

that is depreciated for the regular tax

and Preferences

the dotted line to the left of the entry

using the 150% declining balance

space.

To avoid duplication, do not

method or the straight line method.

5. Complete the rest of the form in

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include any AMT adjustment or

Property for which the corporation

the normal manner.

preference taken into account

elected to use the alternative

CAUTION

on line 2j, 2k, 2l, or 2r in the amounts to

depreciation system (ADS) of section

Allocating Differently

be entered on any other line of this

168(g) for the regular tax.

•

form.

Property that is qualified property

Treated Items Between

under section 168(k)(2) (property

Certain Entities and

Line 2a—Depreciation of

eligible for the special depreciation

allowance). The special allowance is

Post-1986 Property

Their Investors

deductible for the AMT, and there also

is no adjustment required for any

For a regulated investment company, a

Do not make a depreciation

depreciation figured on the remaining

real estate investment trust, or a

adjustment on line 2a for:

basis of the qualified property. Property

common trust fund, see section 59(d)

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A tax shelter farm activity. Take

for which an election is in effect under

for details on allocating certain

this adjustment into account on line 2j.

section 168(k)(2)(C)(iii) to not have the

differently treated items between the

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Passive activities. Take this

special allowance apply is not qualified

entity and its investors.

adjustment into account on line 2k.

property. See the Instructions for Form

•

Credit for Prior Year

4562 for the definition of qualified

An activity for which the

property.

corporation is not at risk or income

Minimum Tax

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or loss from a partnership or an S

Any part of the cost of any property

A corporation may be able to take a

corporation if the basis limitations

for which the corporation made the

minimum tax credit against the regular

apply. Take this adjustment into

election under section 179 to treat the

tax for AMT incurred in prior years. See

account on line 2l.

cost of the property as a deductible

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Instructions For Form 4626 - 2001 Page 2

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