Instructions For Form 4626 - Alternative Minimum Tax - Corporations

Department of the Treasury

Internal Revenue Service

Instructions for Form 4626

Alternative Minimum Tax—Corporations

Section references are to the Internal Revenue Code unless otherwise noted.

General Instructions

Credit for Prior Year Minimum

2. See Rev. Proc. 87-57, 1987-2 C.B. 687,

for optional tables (14 through 18) that you

Tax

Paperwork Reduction Act

can use to figure depreciation for AMT

See Form 8827, Credit for Prior Year

purposes. (These optional tables also appear

Notice

Minimum Tax—Corporations, for details

in Pub. 534.);

We ask for the information on this form to

concerning the computation of the credit.

3. Do not make an adjustment for:

carry out the Internal Revenue laws of the

(a) property for which the corporation made a

Specific Instructions

United States. You are required to give us the

section 168(g)(7) election (to use the ADS of

information. We need it to ensure that you are

section 168(g)) for regular tax purposes,

Line 1.—Enter the corporation’s taxable

complying with these laws and to allow us to

(b) property expensed under section 179 for

income or (loss) before the NOL deduction.

figure and collect the right amount of tax.

regular tax purposes, or (c) property

For example, if you file Form 1120, subtract

The time needed to complete and file this

described in sections 168(f)(1) through (4);

line 29b from line 28.

form will vary depending on individual

and

Important: If the corporation is subject to the

circumstances. The estimated average time

4. You must take into consideration the

environmental tax, you will generally need to

is:

transitional rules (described in section

figure that tax on line 18 before completing

Recordkeeping

18 hr., 53 min.

56(a)(1)(C)) and the normalization rules

line 1 (see instructions for line 18).

(described in section 56(a)(1)(D)).

Learning about the law

Line 2a. Depreciation of tangible property

or the form

13 hr., 55 min.

Subtract the recomputed AMT expense

placed in service after 1986 (or after July

from the depreciation expense claimed for

Preparing and sending

31, 1986, if you made the transitional

regular tax purposes and enter the result on

the form to the IRS

14 hr., 50 min.

election under section 203(a)(1)(B) of the

line 2a. If the recomputed AMT expense is

Tax Reform Act of 1986).—

If you have comments concerning the

more than the depreciation expense claimed

Caution: Do not include depreciation

accuracy of these time estimates or

for regular tax purposes, enter the difference

adjustments attributable to passive activities

suggestions for making this form more

as a negative amount.

or tax shelter farm activities on line 2a.

simple, we would be happy to hear from you.

Note: Depreciation that is capitalized to

You can write to both the IRS and the Office

Instead, include them on line 2j or 2k.

inventory under the uniform capitalization

of Management and Budget at the addresses

The depreciation expense allowable for

rules must be refigured using the rules

listed in the instructions for the tax return

regular tax purposes under section 167 with

described above.

with which this form is filed.

respect to any tangible property placed in

Line 2b. Amortization of certified pollution

service after 1986 must be recomputed for

A Change To Note

control facilities placed in service after

AMT purposes under the alternative

1986.—The amortization deduction claimed

We have relocated lines 11 and 12 of last

depreciation system (ADS) described in

for regular tax purposes is not allowed for

year’s adjusted current earnings (ACE)

section 168(g) as follows:

AMT purposes.

adjustment worksheet in the instructions to

1. For any real property described in

lines 5b and 5c of the form. We added lines

For AMT purposes, use the ADS described

section 1250(c) (generally nonresidential real

5d and 5e to the form to help you compute

in section 168(g) (i.e., use the straight line

and residential rental), use the straight line

the corporation’s allowable ACE adjustment

method over the facility’s class life). The

method over 40 years with the same

(particularly when a potential negative ACE

facility’s class life is listed in Rev. Proc. 87-56

mid-month convention used for regular tax

adjustment is limited under section

or in Pub. 534.

purposes;

56(g)(2)(B)).

Note: Section 168(g) applies to 100% of the

2. For any tangible property (other than the

asset’s amortizable basis. Do not reduce the

Who Must File

real property described in 1 above) for which

corporation’s AMT basis by the 20% section

depreciation for regular tax purposes is

File Form 4626 if the corporation’s taxable

291 adjustment that applied for regular tax

determined using the straight line method,

income or (loss) before the net operating loss

purposes.

recompute the depreciation expense using

(NOL) deduction when combined with its

the straight line method over the property’s

Subtract the recomputed AMT expense

adjustments and tax preference items

class life with the same convention used for

from the expense claimed for regular tax

(including the ACE adjustment) totals more

regular tax purposes;

purposes and enter the result on line 2b. If

than the smaller of: (a) $40,000, or (b) its

the recomputed AMT expense is more than

3. For all tangible property other than

allowable exemption amount.

the expense claimed for regular tax purposes,

property described in 1 or 2 above, use the

enter the difference as a negative amount.

Short Period Return

150% declining balance method, switching to

the straight line method the first tax year it

Line 2c. Amortization of mining exploration

If this is a short period return, use the formula

gives a larger deduction, over the property’s

and development costs paid or incurred

in section 443(d) to determine the

class life. Use the same convention used for

after 1986.—If, for regular tax purposes, the

corporation’s alternative minimum taxable

regular tax purposes.

corporation elected the optional 10-year

income (AMTI) and alternative minimum tax

writeoff under section 59(e) for all assets in

In applying the above rules:

(AMT).

this category, skip this line (no adjustment is

1. The class life you use for AMT purposes

Apportionment of Differently

necessary).

is not necessarily the same as the recovery

The deduction claimed for regular tax

Treated Items in Case of

period used for regular tax purposes. The

purposes under sections 616(a) and 617(a) is

class lives you use for AMT purposes are

Certain Entities

not allowed for AMT purposes. Instead,

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

capitalize those costs and amortize them

If you are preparing Form 4626 for a

or in Pub. 534, Depreciation. Use 12 years for

ratably over a 10-year period beginning with

regulated investment company, a real estate

any tangible personal property that does not

the tax year in which the corporation made

investment trust, or a common trust fund, see

have an assigned class life;

them.

section 59(d).

Cat. No. 64443L

Instructions For Form 4626 - Alternative Minimum Tax - Corporations - 1992

Related Articles

Related forms

Related Categories