Instructions For Form 4626 - 2001 Page 6
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11Line 4—Adjusted
year to year (even in years in which it
Line 2r—Other Adjustments
does not owe any AMT).
Enter the net amount of the following
Current Earnings (ACE)
Any potential negative ACE
adjustments.
•
Adjustment
adjustment that is not allowed as a
Income eligible for the
negative ACE adjustment in a tax year
possessions tax credit. If this income
Note: The ACE adjustment does not
because of the line 4d limitation may
was included in the corporation’s
apply to a regulated investment
not be used to reduce a positive ACE
taxable income for the regular tax,
company or a real estate investment
adjustment in any other tax year.
include this amount on line 2r as a
trust.
Combine lines 4d and 4e of the 2000
negative amount.
Line 4b
•
Form 4626 and enter the result on line
Income from the alcohol fuel
4d of the 2001 form, but not less than
credit. If this income was included in
Important: For an affiliated group filing
zero.
the corporation’s income for the regular
a consolidated return under the rules of
Example. Corporation C, a
tax, include this amount on line 2r as a
section 1501, figure line 4b on a
calendar-year corporation, was
negative amount.
consolidated basis.
•
incorporated January 1, 1997. Its ACE
Income as the beneficiary of an
The following examples illustrate the
and pre-adjustment AMTI for 1997
estate or trust. If the corporation is the
manner in which line 3 is subtracted
through 2001 were as follows.
beneficiary of an estate or trust, include
from line 4a to get the amount to enter
on line 2r the minimum tax adjustment
on line 4b.
Pre-
from Schedule K-1 (Form 1041), line 9.
adjustment
•
Example 1. Corporation A has line 4a
Year
ACE
AMTI
Net AMT adjustment from an
ACE of $25,000. If Corporation A has
electing large partnership. If the
1997
$700,000
$800,000
line 3 pre-adjustment AMTI in the
corporation is a partner in an electing
1998
900,000
600,000
amounts shown below, its line 3
large partnership, include on line 2r the
pre-adjustment AMTI and line 4a ACE
amount from Schedule K-1 (Form
1999
400,000
500,000
would be combined as follows to
1065-B), box 6. Also include on line 2r
2000
(100,000)
300,000
determine the amount to enter on line
any amount from Schedule K-1 (Form
2001
250,000
100,000
4b.
1065-B), box 5, unless the corporation
is closely held or a personal service
Corporation C subtracts its
corporation. Closely held and personal
Line 4a ACE
$25,000 $25,000 $25,000
pre-adjustment AMTI from its ACE in
service corporations should take any
each of the years and then multiplies
Line 3 pre-adj.
amount from box 5 into account when
AMTI
10,000
30,000 (50,000)
the result by 75% to get the following
figuring the amount to enter on line 2k.
•
potential ACE adjustments for 1997
Patron’s AMT adjustment.
Amount to enter
through 2001.
Distributions the corporation received
on line 4b
$15,000 $(5,000) $75,000
from a cooperative may be includible in
ACE minus
Potential
income. Unless the distributions are
pre-adjustment
ACE
Example 2. Corporation B has line 4a
nontaxable, include on line 2r the total
Year
AMTI
adjustment
ACE of $(25,000). If Corporation B has
AMT patronage dividend adjustment
line 3 pre-adjustment AMTI in the
1997
$(100,000)
$ (75,000)
reported to the corporation from the
amounts shown below, its line 3
1998
300,000
225,000
cooperative.
pre-adjustment AMTI and line 4a ACE
•
Cooperative’s AMT adjustment. If
1999
(100,000)
(75,000)
would be combined as shown below to
the corporation is a cooperative,
2000
(400,000)
(300,000)
determine the amount to enter on line
refigure the cooperative’s deduction for
4b.
2001
150,000
112,500
patronage dividends by taking into
account the cooperative’s AMT
Line 4a ACE
$(25,000) $(25,000) $(25,000)
Under these facts, Corporation C
adjustments and preferences. Subtract
has the following increases or
the cooperative’s AMT deduction for
Line 3 pre-adj.
reductions in AMTI for 1997 through
patronage dividends from its regular tax
AMTI
(10,000) (30,000)
50,000
2001.
deduction for patronage dividends and
include the result on line 2r. If the AMT
Amount to enter
Increase or (reduction)
deduction is more than the regular tax
on line 4b
$(15,000)
$5,000 $(75,000)
in AMTI from ACE
deduction, include the result as a
Year
adjustment
negative amount.
Line 4d. A potential negative ACE
1997
$0
•
Related adjustments. AMT
adjustment (i.e., a negative amount on
1998
225,000
adjustments and preferences may
line 4b multiplied by 75%) is allowed as
affect deductions that are based on an
a negative ACE adjustment on line 4e
1999
(75,000)
income limit (e.g., charitable
only if the corporation’s total increases
2000
(150,000)
contributions). Refigure these
in AMTI from prior year ACE
2001
112,500
deductions using the income limit as
adjustments exceed its total reductions
modified for the AMT. Include on line 2r
in AMTI from prior year ACE
an adjustment for the difference
adjustments (line 4d). The purpose of
In 1997, Corporation C was not
between the regular tax and AMT
line 4d is to provide a “running balance”
allowed to reduce its AMTI by any part
amounts for all such deductions. If the
of this limitation amount. As such, the
of the potential negative ACE
AMT deduction is more than the regular
corporation must keep adequate
adjustment because it had no increases
tax deduction, include the difference as
records (e.g., a copy of Form 4626
in AMTI from prior year ACE
a negative amount.
completed at least through line 5) from
adjustments.
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