Instructions For Form 4626 - 2001 (Page 3 of 11) in pdf

expense. The reduction to the

See Pub. 946 for optional tables

the mining development and

depreciable basis of section 179

that may be used to figure AMT

exploration costs paid or incurred

TIP

property by the amount of the section

depreciation. Rev. Proc. 89-15,

during the tax year. Do not reduce the

179 expense deduction is the same for

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

corporation’s AMT basis by the 30%

the regular tax and the AMT.

short years and for property disposed

section 291 adjustment that applied for

•

Property described in sections

of before the end of the recovery

the regular tax.

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

period.

If the corporation had a loss on

•

Qualified Indian reservation property.

property for which mining exploration

How Is the Line 2a Adjustment

and development costs have not been

How Is Depreciation Refigured

Figured?

fully amortized for the AMT, the AMT

for the AMT?

Subtract the AMT deduction for

deduction is the smaller of (a) the loss

depreciation from the regular tax

Property placed in service before

allowable for the costs had they

deduction and enter the result. If the

1999. Refigure depreciation for the

remained capitalized or (b) the

AMT deduction is more than the regular

AMT using ADS, with the same

remaining costs to be amortized for the

tax deduction, enter the difference as a

convention used for the regular tax.

AMT.

negative amount.

See the table below for the method and

Subtract the AMT deduction from the

recovery period to use.

In addition to the AMT adjustment to

regular tax deduction. Enter the result

the deduction for depreciation, also

on line 2c. If the AMT deduction is more

adjust the amount of depreciation that

Property Placed in Service Before 1999

than the regular tax deduction, enter

was capitalized, if any, to account for

the difference as a negative amount.

the difference between the rules for the

IF the property is . . .

THEN use the . . .

regular tax and the AMT. Include on

Line 2d—Amortization of

Section 1250

Straight line method

this line the current year adjustment to

Circulation Expenditures

property.

over 40 years.

taxable income, if any, resulting from

the difference.

Tangible property

Straight line method

Note: This adjustment applies only to

(other than section

over the property’s

expenditures of a personal holding

1250 property)

AMT class life.

Line 2b—Amortization of

company for which the company did not

depreciated using

Certified Pollution Control

elect the optional 3-year write-off under

straight line for the

regular tax.

section 59(e) for the regular tax.

Facilities

For the regular tax, circulation

Any other tangible

150% declining

For facilities placed in service before

property.

balance method,

expenditures may be deducted in full

1999, figure the amortization deduction

switching to straight

when paid or incurred. For the AMT,

for the AMT using ADS (i.e., the

line the first tax year

these expenditures must be capitalized

straight line method over the facility’s

it gives a larger

and amortized over 3 years.

deduction, over the

class life). For facilities placed in

property’s AMT

service after 1998, figure the

If the corporation had a loss on

class life.

amortization deduction for the AMT

property for which circulation

under MACRS using the straight line

expenditures have not been fully

Property placed in service after 1998.

method. Figure the AMT deduction

amortized for the AMT, the AMT

Use the same convention and recovery

using 100% of the asset’s amortizable

deduction is the smaller of (a) the loss

period used for the regular tax. Use the

basis. Do not reduce the corporation’s

allowable for the expenditures had they

straight line method for section 1250

AMT basis by the 20% section 291

remained capitalized or (b) the

property. Use the 150% declining

adjustment that applied for the regular

remaining expenditures to be amortized

balance method, switching to straight

tax.

for the AMT.

line the first tax year it gives a larger

Enter the difference between the

Subtract the AMT deduction from the

deduction, for other property.

AMT deduction and the regular tax

regular tax deduction. Enter the result

Note: If you did not make this

deduction on line 2b. If the AMT

on line 2d. If the AMT deduction is

adjustment in prior years for section

deduction is more than the regular tax

more than the regular tax deduction,

1250 property placed in service after

deduction, enter the difference as a

enter the difference as a negative

1998 that was not depreciated for the

negative amount.

amount.

regular tax using the straight line

Line 2c—Amortization of

Line 2e—Adjusted Gain or

method, you must file an amended

return if you are required to file Form

Mining Exploration and

Loss

4626 (after taking this adjustment into

Development Costs

If, during the tax year, the corporation

account).

Note: This adjustment applies only to

disposed of property for which it is

How Is the AMT Class Life

costs for which the corporation did not

making (or previously made) any of the

Determined?

elect the optional 10-year write-off

adjustments described on lines 2a

through 2d above, refigure the

under section 59(e) for the regular tax.

The class life used for the AMT is not

property’s adjusted basis for the AMT.

necessarily the same as the recovery

For the AMT, the regular tax

Then refigure the gain or loss on the

period used for the regular tax. The

deductions under sections 616(a) and

disposition.

class lives for the AMT are listed in

617(a) are not allowed. Instead,

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

capitalize these costs and amortize

The property’s adjusted basis for the

in Pub. 946, How To Depreciate

them ratably over a 10-year period

AMT is its cost minus all applicable

Property. Use 12 years for any tangible

beginning with the tax year in which the

depreciation or amortization deductions

personal property not assigned a class

corporation paid or incurred them. The

allowed for the AMT during the current

life.

10-year amortization applies to 100% of

tax year and previous tax years.

-3-

Instructions For Form 4626 - 2001 Page 3

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