Instructions For Form 4626 - Alternative Minimum Tax - Corporations

Disallowed losses of a personal service

AMT purposes, enter the difference as a

Line 3d. Intangible drilling costs.—If, for

corporation are suspended until the

negative amount.

regular tax purposes, the corporation elected

corporation has income from that (or any

the optional 60-month writeoff under section

Line 2m. Other adjustments.—Include on

other) passive activity or until the passive

59(e) for all assets in this category, skip this

this line:

activity is disposed of (i.e., its passive losses

line (no adjustment is necessary).

1. Income eligible for the possessions tax

cannot offset “net active income” (defined in

Intangible drilling costs (IDCs) from oil, gas,

credit—The corporation’s AMTI must not

section 469(e)(2)(B)) or “portfolio income”).

and geothermal properties are a tax

include any income (from the sources

Disallowed losses of a closely held

preference item to the extent that excess

described in section 936(a)(1)) that is eligible

corporation that is not a personal service

IDCs exceed 65% of the net income from the

for the possessions tax credit of section 936.

corporation are treated the same except that,

properties. The tax preference item is

If you included this type of income in the

in addition, they may be used to offset “net

computed separately for geothermal deposits,

corporation’s taxable income for regular tax

active income.”

and for oil and gas properties that are not

purposes, enter the amount on line 2m as a

Note: The amount of any passive activity loss

geothermal deposits.

negative amount.

that is not deductible (and is therefore

“Excess IDCs” are the excess of:

2. Income with respect to the alcohol fuel

suspended and carried forward) for AMT

(1) the amount of IDCs the corporation paid

credit—The corporation’s AMTI must not

purposes is likely to differ from the amount (if

or incurred with respect to oil, gas, or

include any amount with respect to the

any) that is carried forward for regular tax

geothermal properties that it elected to

alcohol fuel credit that was included in the

purposes. Keep adequate records for both

expense for regular tax purposes under

corporation’s gross income under section 87.

AMT purposes and regular tax purposes.

section 263(c) (not including any section

If this type of income was included in the

Enter on line 2k the difference between the

263(c) deduction for nonproductive wells)

corporation’s income for regular tax

gain or loss recomputed for AMT purposes

reduced by the section 291 adjustment for

purposes, enter the amount on line 2m as a

and the gain or loss reported for regular tax

integrated oil companies; over (2) the amount

negative amount.

purposes. Enter the difference as a negative

that would have been allowed if the

3. Income as the beneficiary of an estate or

amount if the corporation:

corporation had amortized that amount over a

trust—If the corporation is the beneficiary of

120-month period starting with the month the

Reported a loss for AMT purposes and a

an estate or trust, enter the minimum taxable

well was placed in production.

gain for regular tax purposes, OR

income adjustment from Schedule K-1 (Form

Note: If the corporation prefers not to use the

Recomputed a loss for AMT purposes that

1041), line 8.

120-month period, it can elect to use any

exceeds the loss reported for regular tax

Line 3a. Depletion.—In the case of mines,

method that is permissible in determining cost

purposes, OR

wells, and other natural deposits, enter the

depletion.

Reported a gain for regular tax purposes

amount by which the corporation’s depletion

“Net income” is the gross income the

that exceeds the gain recomputed for AMT

deduction under section 611 exceeds the

corporation received or accrued from all oil,

purposes.

adjusted basis of the property at the end of

gas, and geothermal wells minus the

the corporation’s tax year. In computing the

Tax shelter farm activities that are passive

deductions allocable to these properties

yearend adjusted basis, use the rules of

activities.—Recompute all gains and losses

(reduced by the excess IDCs).

section 1016; however, do not reduce basis

reported for regular tax purposes by taking

by the current year’s depletion deduction.

Line 3e. Reserves for losses on bad debts

into account the corporation’s AMT

of financial institutions.—Enter the excess

adjustments, tax preference items, and AMT

Figure the excess separately for each

of: (1) the deduction allowable for a

prior year unallowed losses.

property. If the depletion deduction for any

reasonable addition to a reserve for bad

property does not exceed the property’s

Important: To avoid duplication, do not

debts of a financial institution to which

yearend adjusted basis, do not reduce line 3a

include any AMT adjustment or tax preference

section 593 applies (reduced by the section

by that shortfall. (In other words, do not use a

item taken into account here in the amounts

291 adjustment), over (2) the amount that

shortfall for one property to offset the excess

to be entered on any other line of this form.

would have been allowable had the financial

of depletion deduction over adjusted basis for

Take into account these recomputed gains

institution maintained its bad debt reserve for

any other property.)

and losses when figuring the corporation’s

all tax years on the basis of actual

Note: In the case of iron ore and coal

passive activity gain or loss for AMT purposes

experience.

(including lignite), apply the section 291

described above. Use the same rules outlined

Line 3f. Accelerated depreciation of real

adjustment before figuring this tax preference

above, with the following additional

property placed in service before 1987.—

item.

modification: Recomputed gains from tax

Enter the excess of the depreciation claimed

shelter farm activities that are passive

Line 3b. Tax-exempt interest from private

for the property for regular tax purposes over

activities may be used to offset recomputed

activity bonds issued after August 7,

the depreciation allowable for AMT purposes

losses from other passive activities. However,

1986.—Enter interest earned on specified

as refigured using the straight line method.

recomputed losses from tax shelter farm

private activity bonds reduced by any

Figure this amount separately for each

activities that are passive activities may not

deduction that would have been allowable if

property and include only positive

be used to offset recomputed gains from

the interest were includible in gross income

adjustments on line 3f. For 15-, 18-, or

other passive activities. (Recomputed losses

for regular tax purposes. Generally, a

19-year real property, use the straight line

from tax shelter farm activities that are

“specified private activity bond” is any private

method over 15, 18, or 19 years, respectively.

passive activities are disallowed and must be

activity bond (as defined in section 141)

For low-income housing property, use the

suspended and carried forward as explained

issued after August 7, 1986. See section

straight line method over 15 years.

in the instructions for line 2j.)

57(a)(5) for exceptions and for more

Line 3g. Accelerated depreciation of leased

information.

Line 2l. Certain loss limitations.—

personal property placed in service before

Recompute gains and losses reported for

Line 3c. Appreciated property charitable

1987 (personal holding companies only).—

regular tax purposes from at-risk activities

deduction.—Enter the amount by which the

For leased personal property, other than

and partnerships by taking into account the

corporation’s charitable contribution

recovery property, enter the excess of the

corporation’s AMT adjustments and tax

deduction allowable under section 170 would

depreciation claimed for the property for

preference items. If the corporation has

be reduced if all capital gain property were

regular tax purposes over the depreciation

recomputed losses that must (in accordance

taken into account at its adjusted basis

allowable for AMT purposes as refigured

with section 59(h)) be limited for AMT

(rather than its fair market value).

using the straight line method. Figure this

purposes by section 465 or by section 704(d)

For these purposes, “capital gain property”

amount separately for each property and

OR if, for regular tax purposes, the

has the same meaning given by section

include only positive adjustments on line 3g.

corporation reported losses from at-risk

170(b)(1)(C)(iv), except that it does not include

For leased recovery property, other than

activities or partnerships that were limited by

any property to which an election under

15-, 18-, or 19-year real property, or

those sections, compute the difference

section 170(b)(1)(C)(iii) applies. In the case of

low-income housing, enter the amount by

between the loss limited for AMT purposes

a contribution made before July 1, 1992, the

which the corporation’s depreciation

and the loss limited for regular tax purposes

term does not include any tangible personal

deduction for regular tax purposes is more

for each applicable at-risk activity or

property.

than the deduction allowable for AMT

partnership. If the loss limited for regular tax

purposes is more than the loss limited for

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Instructions For Form 4626 - Alternative Minimum Tax - Corporations - 1992 Page 3

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