Instructions For Form 4626 - Alternative Minimum Tax - Corporations

Note: The 10-year amortization applies to

The gain recomputed for AMT purposes is

organizations only).—This deduction is not

100% of the mining development and

less than the gain computed for regular tax

allowed for AMT purposes. If the corporation

exploration costs paid or incurred during the

purposes, OR

took this deduction for regular tax purposes,

tax year. Do not reduce the corporation’s

add it back on line 2i.

The loss recomputed for AMT purposes is

AMT basis by the 30% section 291

more than the loss computed for regular tax

Line 2j. Tax shelter farm activities

adjustment that applied for regular tax

purposes, OR

(personal service corporations only).—

purposes.

Complete line 2j only if the corporation has a

The corporation recomputed a loss for AMT

Subtract the recomputed AMT expense

gain or loss from a tax shelter farm activity

purposes and computed a gain for regular tax

from the expense claimed for regular tax

(as defined in section 58(a)(2)) that is not a

purposes.

purposes and enter the result on line 2c. If

passive activity. If the tax shelter farm activity

Line 2f. Long-term contracts entered into

the recomputed AMT expense is more than

is a passive activity, you must include the

after February 28, 1986.—For AMT

the expense claimed for regular tax purposes,

gain or loss in the computations for line 2k

purposes, use the percentage-of-completion

enter the difference as a negative amount.

below.

method rules described in section 460(b) to

See section 56(a)(2)(B) if the corporation had

Recompute all gains and losses reported

determine the taxable income from any

a loss from any mine or other natural deposit

for regular tax purposes from tax shelter farm

“long-term contract” (defined in section

(other than an oil, gas, or geothermal well).

activities by taking into account the

460(f)) entered into after February 28, 1986.

Line 2d. Amortization of circulation

corporation’s AMT adjustments and tax

However, this rule does not apply to: (1) any

expenditures paid or incurred after 1986

preference items.

“home construction contract” (as defined in

(personal holding companies only).—If, for

section 460(e)(6)) entered into after June 20,

Important: To avoid duplication, do not

regular tax purposes, the corporation elected

1988, for which the corporation meets the

include any AMT adjustment or tax preference

the optional 3-year writeoff under section

“small” home construction contract

item taken into account on line 2j in the

59(e) for all of these expenditures, skip this

requirements of section 460(e)(1)(B) or (2) any

amounts to be entered on any other line of

line (no adjustment is necessary).

home construction contract entered into in a

this form.

The deduction claimed for regular tax

tax year beginning after September 30, 1990,

Determine the corporation’s tax shelter

purposes (under section 173) for these

regardless of whether the corporation meets

farm activity gain or loss for AMT purposes

expenditures incurred after 1986 is not

the “small” home construction contract

using the same rules used for regular tax

allowed for AMT purposes. For AMT

requirements of section 460(e)(1)(B).

purposes with the following modification: No

purposes, capitalize these expenditures and

Note: In the case of a contract described in

recomputed loss is allowed, except to the

amortize them ratably over a 3-year period

section 460(e)(1), determine the percentage of

extent the personal service corporation is

beginning with the tax year in which the

the contract completed using the simplified

insolvent (see section 58(c)(1)). Do not use a

corporation made them.

procedures for allocating costs outlined in

recomputed loss in the current tax year to

Subtract the recomputed AMT expense

section 460(b)(4).

offset gains from other tax shelter farm

from the expense claimed for regular tax

activities. Instead, suspend any recomputed

Subtract the income reported for regular

purposes and enter the result on line 2d. If

loss and carry it forward indefinitely until:

tax purposes from the income recomputed for

the recomputed AMT expense is more than

(1) the corporation has a gain in a

AMT purposes and enter the difference on

the expense claimed for regular tax purposes,

subsequent tax year from that same tax

line 2f. If the recomputed AMT income is less

enter the difference as a negative amount.

shelter farm activity, OR (2) it disposes of the

than the income reported for regular tax

See section 56(b)(2)(B) if the corporation had

activity.

purposes, enter the difference as a negative

a loss from circulation expenditures deducted

amount.

Note: The amount of any tax shelter farm

under section 173.

activity loss that is not deductible (and is

Line 2g. Installment sales of certain

Line 2e. Basis adjustments in determining

therefore carried forward) for AMT purposes is

property.—For either of the following kinds of

gain or loss from sale or exchange of

likely to differ from the amount (if any) that is

dispositions in which the corporation used the

property.—If, during the tax year, the

suspended and carried forward for regular tax

installment method for regular tax purposes,

corporation disposed of property for which

purposes. Keep adequate records for both

refigure its income for AMT purposes without

you are making (or have previously made) any

AMT purposes and regular tax purposes.

regard to the installment method:

of the adjustments described in lines 2a

Enter on line 2j the difference between the

1. Any disposition after March 1, 1986, of

through 2d above, recompute the property’s

gain or loss recomputed for AMT purposes

property used or produced in the

adjusted basis for AMT purposes. Then

and the gain or loss reported for regular tax

corporation’s farming business that it held

recompute the gain or loss on the disposition.

purposes. Enter the difference as a negative

primarily for sale to customers.

The property’s adjusted basis for AMT

amount if the corporation:

2. Any nondealer disposition of property

purposes is its cost minus all applicable

Reported a loss for AMT purposes and a

that occurred after August 16, 1986, but

depreciation or amortization deductions

gain for regular tax purposes, OR

before the first day of the corporation’s tax

allowed for AMT purposes during the current

year that began in 1987, if an obligation that

Recomputed a loss for AMT purposes that

tax year and previous tax years. Subtract this

arose from the disposition was an installment

exceeds the loss reported for regular tax

recomputed basis from the sales price to

obligation to which the proportionate

purposes, OR

arrive at the gain or loss for AMT purposes.

disallowance rule applied.

Reported a gain for regular tax purposes

Note: The corporation may also have gains or

Enter on line 2g the difference between the

that exceeds the gain recomputed for AMT

losses from lines 2j, 2k, and 2l that must be

income recomputed for AMT purposes and

purposes.

taken into consideration on line 2e. For

the income reported for regular tax purposes.

Line 2k. Passive activities (closely held

example, if for regular tax purposes the

If the income reported for regular tax

corporations and personal service

corporation reports a loss from the disposition

purposes is more than the income

corporations only).—Recompute all passive

of an asset used in a passive activity, include

recomputed for AMT purposes, enter the

activity gains and losses reported for regular

the loss in the computations for line 2k to

difference as a negative amount.

tax purposes by taking into account the

determine whether any passive activity loss is

Line 2h. Merchant marine capital

corporation’s AMT adjustments, tax

limited for AMT purposes. Then, include the

construction funds.—Amounts deposited in

preference items, and AMT prior year

portion of the AMT passive activity loss

these funds (established under section 607 of

unallowed losses.

allowed that pertains to the disposition of the

the Merchant Marine Act of 1936) after 1986

asset on line 2e in determining the

Important: To avoid duplication, do not

are not deductible for AMT purposes.

corporation’s AMT basis adjustment. It may

include any AMT adjustment or tax preference

Earnings on these funds are not excludable

be helpful to refigure Form 8810 and related

item taken into account on line 2k in the

from gross income for AMT purposes. If the

worksheets and Schedule D (Form 1120),

amounts to be entered on any other line of

corporation deducted these amounts or

Form 4684 (Section B), or Form 4797 for AMT

this form.

excluded them from income for regular tax

purposes.

Determine the corporation’s passive activity

purposes, add them back on line 2h. See

Enter the difference between the gain or

gain or loss for AMT purposes using the

section 56(c)(2) for more information.

loss for regular tax purposes and the

same rules used for regular tax purposes. If

Line 2i. Section 833(b) deduction (Blue

recomputed gain or loss for AMT purposes.

the corporation is insolvent, see section

Cross, Blue Shield, and similar type

Enter the difference as a negative amount if:

58(c)(1).

Page 2

Instructions For Form 4626 - Alternative Minimum Tax - Corporations - 1992 Page 2

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