Instructions For Form 4626 - 2001 (Page 8 of 11) in pdf

from the amount (if any) that is carried

To determine if the corporation has a

2. If the corporation previously

back or carried over for the regular tax.

net unrealized built-in loss, use the

made or is making the simplified

Keep adequate records for both the

aggregate adjusted basis of its assets

limitation election (discussed below),

AMT and the regular tax.

used for figuring its ACE.

skip Schedule A of the AMT Form 1118

and enter on Schedule B, Part II, line 6,

Note: Use these new adjusted bases

Simplified Limitation

the same amount you entered on that

for all future ACE calculations (such as

line for the regular tax. Otherwise,

Election

depreciation and gain or loss on

complete Schedule A using only

disposition of an asset).

The corporation may elect to use a

income and deductions that are allowed

simplified section 904 limitation to figure

Line 2—ACE Depreciation

for the AMT and attributable to sources

its AMTFTC. The corporation must

Adjustment

outside the United States.

make the election for its first tax year

3. Complete Schedule B, Part II, of

Line 2a. Generally, the amount

beginning after 1997 for which it claims

the AMT Form 1118. Enter any

an AMTFTC. If it does not make the

entered on this line is the depreciation

AMTFTC carryover on Schedule B, Part

election for that tax year, it may not

the corporation claimed for the regular

II, line 4, of the AMT Form 1118. Enter

make the election for a later tax year.

tax (Form 4562, line 21), modified by

the AMTI from Form 4626, line 7, on

Once made, the election applies to all

the AMT depreciation adjustments

Schedule B, Part II, line 7a. Enter the

later tax years and may only be

reported on lines 2a, 2p, and 2q of

amount from Form 4626, line 11, on

revoked with IRS consent.

Form 4626.

Schedule B, Part II, line 9.

Line 2b(1). For property placed in

If the corporation made the election,

Note: When completing Schedule B of

service after 1993, the ACE

use the corporation’s regular tax

the AMT Form 1118, treat as a tax paid

depreciation is the same as the AMT

income instead of refiguring its foreign

to a foreign country 75% of any

depreciation. Therefore, enter on line

source income for the AMT, as

withholding or income tax paid to a U.S.

2b(1) the same depreciation expense

described earlier.

possession on dividends received from

you entered on line 2a for such

a corporation that qualifies for the

property.

Line 14

possessions tax credit (if the

Line 2b(2). For property placed in

dividends-received deduction for those

Enter the corporation’s regular tax

service in a tax year that began after

dividends is disallowed under the ACE

liability (as defined in section 26(b))

1989 and before 1994, use the ADS

rules).

minus any foreign tax credit and

depreciation described in section

4. Complete Schedule B, Part III, of

possessions tax credit (e.g., for Form

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

the AMT Form 1118. The foreign tax

1120: Schedule J, line 3, minus the

placed in service in a tax year that

credit from line 13 of that part is limited

sum of Schedule J, lines 6a and 6b).

began after 1989 and (b) described in

to the tax on Form 4626, line 11, minus

Do not include any:

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

•

10% of the tax that would be on that

Tax on accumulation distribution of

same depreciation claimed for the

line if Form 4626 were refigured using

trusts from Form 4970,

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

•

zero on line 6 and if the exception for

Recapture of investment credit

Line 2b(3). For property placed in

intangible drilling costs (IDCs) under

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

service in a tax year that began after

section 57(a)(2)(E) did not apply.

Form 4255,

1986 and before 1990 (MACRS

•

If there is no entry on Form 4626,

Recapture of low-income housing

property), use the straight line method

line 6, and no IDCs (or the exception

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

over the remainder of the recovery

does not apply to the corporation),

Form 8611, or

period for the property under the ADS

•

enter on Form 4626, line 12, the

Recapture of any other credit.

of section 168(g). In doing so, use the

smaller of:

convention that would have applied to

•

90% of Form 4626, line 11, or

the property under section 168(d). For

•

The amount from the AMT Form

more information (including an example

ACE Worksheet

1118, Schedule B, Part III, line 13.

that illustrates the application of these

Instructions

If Form 4626, line 6, has an amount

rules), see Regulations section

or the exception for IDCs applies to the

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

corporation:

Treatment of Certain

Line 2b(4). For property placed in

1. Refigure what the tax on line 11

Ownership Changes

service in a tax year that began after

would have been if line 6 were zero and

1980 and before 1987 (to which the

If a corporation with a net unrealized

the exception did not apply,

original ACRS applies), use the straight

built-in loss (within the meaning of

2. Multiply that amount by 10%,

line method over the remainder of the

section 382(h)) undergoes an

3. Subtract the result from the tax

recovery period for the property under

ownership change (within the meaning

on line 11, and

ADS. In doing so, use the convention

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

4. Enter on Form 4626, line 12, the

that would have applied to the property

refigure the adjusted basis of each

smaller of that amount or the amount

under section 168(d) (without regard to

asset of the corporation (immediately

from the AMT Form 1118, Schedule B,

section 168(d)(3)). For more

after the ownership change). The new

Part III, line 13.

information (including an example that

adjusted basis of each asset is its

illustrates the application of these

Any AMT foreign tax credit the

proportionate share (based on

rules), see Regulations section

corporation cannot claim (because of

respective fair market values) of the fair

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

the limitation fraction or the 90% limit)

market value of the corporation’s assets

may be carried back or carried over

(determined under section 382(h))

Line 2b(5). For property described in

using the rules in sections 59(a)(2)(B)

immediately before the ownership

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

and 904(c). This amount may differ

change.

regular tax depreciation, regardless of

-8-

Instructions For Form 4626 - 2001 Page 8

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