Instructions For Form 4626 - Alternative Minimum Tax - Corporations - 1992 Page 4
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7purposes using the straight line method over
to year (even in years in which the
Line
Amount
the following recovery period:
corporation does not owe any AMT).
5a
$400,000
Regulations section 1.56(g)-1(a)(2)(ii)
5-year property
8 years
5b
(100,000)
provides that any potential negative ACE
10-year property
15 years
5c
75,000
adjustment that is not allowed as a negative
5d
225,000
15-year public utility property
22 years
ACE adjustment in a tax year because of the
5e
(75,000)
line 5d limitation may not be used to reduce a
Line 3h. Amortization of certified pollution
In 1993, Corporation C is allowed to reduce
positive ACE adjustment in any other tax
control facilities placed in service before
its AMTI by only $150,000 (i.e., its line 5d
year.
1987.—If for regular tax purposes the
limit). Its potential negative ACE adjustment
corporation made an election under section
Enter on line 5d the positive ACE
of $300,000 is limited to its 1991 increase in
169 to amortize the basis of a certified
adjustment, if any, from line 5c of the 1990
AMTI of $225,000 minus its 1992 reduction in
pollution control facility over a 60-month
Form 4626 plus or minus the positive or
AMTI of $75,000. Furthermore, Regulations
period, compute the tax preference for each
negative ACE adjustment, if any, from line 5
section 1.56(g)-1(a)(2)(ii) prevents Corporation
facility as follows:
of the 1991 Form 4626. Do not enter a
C from using the remaining $150,000 of its
negative amount on line 5d for the reason
1. Reduce the current year amortization
potential negative ACE adjustment to reduce
given in the preceding paragraph.
deduction by the 20% section 291
positive ACE adjustments in other tax years.
adjustment;
Example 3: Corporation C, a calendar-year
Line 7. Adjustment based on energy
corporation, has ACE and pre-adjustment
2. Reduce the result in 1 above by the
preferences.—In computing the AMTI of any
AMTI in the following amounts for 1990
deduction the corporation would have been
taxpayer other than an integrated oil
through 1993:
allowed under section 167; and
company, an adjustment is allowed equal to
the smaller of: (a) the alternative tax energy
3. Multiply the result in 2 above by 59
5
⁄
%.
Pre-
6
preference deduction (as defined in section
Include only positive adjustments on line 3h.
adjustment
56(h)(3)) or (b) 40% of line 6 of Form 4626.
Year
ACE
AMTI
Adjusted Current Earnings Adjustment
This amount is phased out as oil prices
1990
$700,000
$800,000
increase (see section 56(h)(2)).
Lines 5a through 5e
1991
900,000
600,000
See section 56(h) for additional details.
1992
400,000
500,000
If you are preparing Form 4626 for a regulated
1993
(100,000)
300,000
Line 8. Alternative tax net operating loss
investment company or a real estate
deduction.—The corporation’s alternative tax
Corporation C subtracts its pre-adjustment
investment trust, skip lines 5a through 5e
net operating loss deduction (ATNOLD) is the
AMTI from its ACE in each of the years and
(they do not apply).
NOL determined for regular tax purposes
then multiplies the result by 75% to arrive at
Line 5b.—If you are preparing Form 4626 for
under section 172, except that:
the following potential ACE adjustments for
an affiliated group that has filed a
1990 through 1993:
1. In the case of a loss year beginning after
consolidated tax return for the current tax
1986, the NOL determined for regular tax
year under the rules of section 1501, you
ACE minus
Potential
purposes from that loss year must be:
must figure line 5b on a consolidated basis.
pre-adjustment
ACE
(a) reduced by the positive AMT adjustments
Year
AMTI
adjustment
The following examples illustrate the
and increased by the negative AMT
manner in which line 4 is subtracted from line
1990
$(100,000)
$(75,000)
adjustments provided in sections 56 and 58,
5a to arrive at the amount to enter on line 5b:
1991
300,000
225,000
and (b) reduced by the tax preference items
1992
(100,000)
(75,000)
Example 1: Corporation A has line 5a ACE of
determined under section 57 (but only to the
1993
(400,000)
(300,000)
$25,000. If Corporation A has line 4
extent they increased the NOL determined for
Under these facts, Corporation C has the
pre-adjustment AMTI in the amounts shown
regular tax purposes).
following increases or reductions in AMTI for
below, its line 4 pre-adjustment AMTI and line
2. In applying the rules outlined in section
1990 through 1993:
5a ACE would be combined as shown below
172(b)(2) (relating to the determination of the
to determine the amount to enter on line 5b:
amount of carrybacks and carryovers), use
Increase or (reduction) in
Year
AMTI from ACE adjustment
the modification to those rules described in
Line 5a ACE
$25,000
$25,000
$25,000
section 56(d)(1)(B)(ii).
Line 4 pre-
1990
$0
3. If, for any tax year beginning before
adjustment AMTI
10,000
30,000
(50,000)
1991
225,000
1987, the corporation had minimum tax that
1992
(75,000)
Amount to
was deferred under section 56(b) (as in effect
1993
(150,000)
enter on line 5b
$15,000
$(5,000)
$75,000
before the enactment of the Tax Reform Act
Detailed explanation of Example 3:
of 1986) and that deferred tax has not been
Example 2: Corporation B has line 5a ACE of
In 1990, Corporation C was not allowed to
paid, reduce the amount of NOL carryovers
negative $25,000. If Corporation B has line 4
reduce its AMTI by any portion of the
that may be carried over to this year for AMT
pre-adjustment AMTI in the amounts shown
potential negative ACE adjustment because it
purposes by the corporation’s tax preference
below, its line 4 pre-adjustment AMTI and line
had no increases in AMTI from prior year ACE
items that gave rise to the deferred add-on
5a ACE would be combined as shown below
adjustments.
minimum tax. (Section 701(f)(2)(B) of the Tax
to determine the amount to enter on line 5b:
Reform Act of 1986.)
In 1991, Corporation C had to increase its
Line 5a ACE
$(25,000)
$(25,000)
$(25,000)
AMTI by the full amount of its potential ACE
4. The corporation’s ATNOLD is limited to
adjustment. Corporation C was not allowed to
the excess (if any) of: (a) 90% of its AMTI
Line 4 pre-
use any portion its 1990 unallowed potential
computed without regard to its ATNOLD and
adjustment AMTI
(10,000)
(30,000)
50,000
negative ACE adjustment of $75,000 to
the adjustment based on energy preferences
Amount to
reduce any portion of its 1991 positive ACE
(i.e., 90% of line 6, Form 4626), over (b) the
enter on line 5b
$(15,000)
$5,000
$(75,000)
adjustment of $225,000 because Regulations
adjustment based on energy preferences (i.e.,
section 1.56(g)-1(a)(2)(ii) prevents a negative
line 7 of Form 4626).
Line 5d.—Section 56(g)(2)(B) provides that a
adjustment that was not allowed under
Note: The amount of any NOL that is not
potential negative ACE adjustment (i.e., a
section 56(g)(2) in one tax year from reducing
deductible for AMT purposes may be carried
negative amount on line 5b multiplied by
a positive ACE adjustment in any other tax
back or carried over in accordance with the
75%) is allowed as a negative ACE
year.
rules outlined in section 172(b). The amount
adjustment on line 5e only to the extent that
In 1992, Corporation C is allowed to reduce
carried back or carried over for AMT purposes
the corporation’s total increases in AMTI from
its AMTI by the full amount of its potential
is likely to differ from the amount (if any) that
prior year ACE adjustments exceed its total
negative ACE adjustment since that amount
is carried back or carried over for regular tax
reductions in AMTI from prior year ACE
is less than its line 5d limit of $225,000.
purposes. Keep adequate records for both
adjustments (line 5d). The purpose of line 5d
Corporation C would complete the relevant
AMT purposes and regular tax purposes.
is to provide a “running balance” of this
portion of its 1992 Form 4626 as follows:
limitation amount. As such, you must keep
adequate records (e.g., a copy of Form 4626
completed at least through line 6) from year
Page 4
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