Instructions For Form 4626 - 2001 (Page 5 of 11) in pdf

gain in a subsequent year from that

more than the regular tax deduction,

Exception. The preference for IDCs

same activity or it disposes of the

enter the difference as a negative

from oil and gas wells does not apply to

activity.

amount.

corporations that are independent

producers (i.e., not integrated oil

Line 2l—Loss Limitations

Line 2n—Tax-Exempt

companies as defined in section

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

Refigure gains and losses reported for

Interest Income From

be limited. First, figure the IDC

the regular tax from at-risk activities

Specified Private Activity

and partnerships by taking into account

preference as if this exception did not

Bonds

the corporation’s AMT adjustments and

apply. Then, for purposes of this

preferences. If the corporation has

exception, complete a second Form

Enter interest income from specified

recomputed losses that must be limited

4626 through line 5, including the IDC

private activity bonds, reduced by any

for the AMT (under section 59(h)) by

deduction that would have been

preference. If the amount of the IDC

section 465 or section 704(d) or the

allowable if the interest were includible

preference exceeds 40% of the amount

corporation reported losses for the

in gross income for the regular tax.

figured for line 5, enter the excess on

regular tax from at-risk activities or

Generally, a specified private activity

line 2o (the benefit of this exception is

partnerships that were limited by those

bond is any private activity bond (as

limited). If the amount of the IDC

sections, figure the difference between

defined in section 141) issued after

preference is equal to or less than 40%

the loss limited for the AMT and the

August 7, 1986. See section 57(a)(5)

of the amount figured for line 5, do not

loss limited for the regular tax for each

for exceptions and details.

include an amount on line 2o for oil and

applicable at-risk activity or partnership.

gas wells (the benefit of this exception

Line 2o—Intangible Drilling

“Loss limited” means the amount of loss

is not limited).

that is not allowable for the year

Costs

because of the limitation of section 465

Line 2p—Accelerated

Note: This preference applies only to

or 704(d).

Depreciation of Real

costs for which the corporation did not

Enter on line 2l the excess of the

elect the optional 60-month write-off

Property (Pre-1987)

loss limited for the AMT over the loss

under section 59(e) for the regular tax.

Refigure depreciation for the AMT using

limited for the regular tax. If the loss

Intangible drilling costs (IDCs) from

the straight line method for real

limited for the regular tax is more than

oil, gas, and geothermal properties are

property for which accelerated

the loss limited for the AMT, enter the

a preference to the extent excess IDCs

depreciation was determined for the

difference as a negative amount.

exceed 65% of the net income from the

regular tax using pre-1987 rules. Use a

properties. Figure the preference for all

Line 2m—Depletion

recovery period of 19 years for 19-year

geothermal deposits separately from

real property and 15 years for

Refigure depletion using only income

the preference for all oil and gas

low-income housing property. Figure

and deductions allowed for the AMT

properties that are not geothermal

the excess of the regular tax

when refiguring the limit based on

deposits.

depreciation over the AMT depreciation

taxable income from the property under

separately for each property and

Excess IDCs are the excess of:

section 613(a) and the limit based on

•

include only positive adjustments on

The amount of IDCs the corporation

taxable income, with certain

line 2p.

paid or incurred for oil, gas, or

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

geothermal properties that it elected to

Also, the depletion deduction for mines,

Line 2q—Accelerated

expense for the regular tax under

wells, and other natural deposits under

Depreciation of Leased

section 263(c) (not including any

section 611 is limited to the property’s

section 263(c) deduction for

adjusted basis at the end of the year,

Personal Property (Pre-1987)

nonproductive wells) reduced by the

as refigured for the AMT, unless the

section 291(b)(1) adjustment for

corporation is an independent producer

Note: This preference applies only to

integrated oil companies and increased

or royalty owner claiming percentage

personal holding companies.

by any amortization of IDCs allowed

depletion for oil and gas wells under

For leased personal property other

under section 291(b)(2) over

section 613A(c). Figure this limit

•

than recovery property, enter the

The amount that would have been

separately for each property. When

excess of the depreciation claimed for

allowed if the corporation had

refiguring the property’s adjusted basis,

the property for the regular tax using

amortized that amount over a

take into account any AMT adjustments

the pre-1987 rules over the

120-month period starting with the

the corporation made this year or in

depreciation allowable for the AMT as

month the well was placed in

previous years that affect basis (other

refigured using the straight line method.

production.

than the current year’s depletion). Do

not include in the property’s adjusted

For leased 10-year recovery

Note: If the corporation prefers not to

basis any unrecovered costs of

property and leased 15-year public

use the 120-month period, it can elect

depreciable tangible property used to

utility property, enter the amount by

any method that is permissible in

exploit the deposits (e.g., machinery,

which the regular tax depreciation

determining cost depletion.

tools, pipes, etc.).

exceeds the depreciation allowable

Net income is the gross income the

using the straight line method with a

For iron ore and coal (including

corporation received or accrued from all

half-year convention, no salvage value,

lignite), apply the section 291

oil, gas, and geothermal wells minus

and a recovery period of 15 years (22

adjustment before figuring this

the deductions allocable to these

years for 15-year public utility property).

preference.

properties (reduced by the excess

Enter on line 2m the difference

IDCs). When refiguring net income, use

Figure this amount separately for

each property and include only positive

between the regular tax and the AMT

only income and deductions allowed for

adjustments on line 2q.

deduction. If the AMT deduction is

the AMT.

-5-

Instructions For Form 4626 - 2001 Page 5

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