Instructions For Form 4626 - 2003 (Page 2 of 11) in pdf

Short Period Return

What Depreciation Is Not

Specific Instructions

Refigured for the AMT?

If the corporation is filing for a period of

Do not refigure depreciation for the

less than 12 months, AMTI must be

Line 1—Taxable Income

AMT for the following.

annualized and the AMT prorated

•

Residential rental property placed in

based on the number of months in the

or (Loss) Before Net

service after 1998.

short period. Complete Form 4626 as

•

Nonresidential real property with a

Operating Loss

follows.

class life of 27.5 years or more

1. Complete lines 1 through 6 in the

Deduction

(generally, a building and its structural

normal manner. Subtract line 6 from

components) placed in service after

Enter the corporation’s taxable income

line 5 to figure AMTI for the short

1998 that is depreciated for the regular

or (loss) before the NOL deduction,

period, but do not enter it on line 7.

tax using the straight line method.

after the special deductions, and

•

Other section 1250 property placed

2. Multiply AMTI for the short period

without regard to any excess inclusion

in service after 1998 that is depreciated

by 12. Divide the result by the number

(e.g., if filing Form 1120, subtract line

for the regular tax using the straight line

29b from line 28 of that form).

of months in the short period. Enter this

method.

result on line 7 and write “Sec.

•

Property (other than section 1250

Line 2—Adjustments

443(d)(1)” on the dotted line to the left

property) placed in service after 1998

of the entry space.

that is depreciated for the regular tax

and Preferences

using the 150% declining balance

3. Complete lines 8 through 11.

To avoid duplication, do not

method or the straight line method.

4. Subtract line 11 from line 10.

•

include any AMT adjustment

Property for which the corporation

Multiply the result by the number of

or preference taken into

elected to use the alternative

CAUTION

months in the short period and divide

account on line 2i, 2j, 2k, or

depreciation system (ADS) of section

that result by 12. Enter the final result

2o in the amounts to be entered on any

168(g) for the regular tax.

•

on line 12 and write “Sec. 443(d)(2)” on

other line of this form.

Qualified property eligible for the

the dotted line to the left of the entry

special depreciation allowance under

Line 2a—Depreciation of

space.

section 168(k). The special allowance is

deductible for the AMT, and there also

Post-1986 Property

5. Complete the rest of the form in

is no adjustment required for any

the normal manner.

depreciation figured on the remaining

Do not make a depreciation

basis of the qualified property. Property

adjustment on line 2a for:

for which an election is in effect under

•

A tax shelter farm activity. Take

Allocating Differently

section 168(k)(2)(C)(iii) to not have the

this adjustment into account on line 2i.

special allowance apply is not qualified

•

Treated Items Between

Passive activities. Take this

property. See the Instructions for Form

adjustment into account on line 2j.

4562 for the definition of qualified

Certain Entities and

•

An activity for which the

property.

•

corporation is not at risk or income

Any part of the cost of any property

Their Investors

or loss from a partnership or an S

for which the corporation made the

For a regulated investment company, a

corporation if the basis limitations

election under section 179 to treat the

real estate investment trust, or a

apply. Take this adjustment into

cost of the property as a deductible

common trust fund, see section 59(d)

account on line 2k.

expense. The reduction to the

for details on allocating certain

depreciable basis of section 179

What Depreciation Must Be

differently treated items between the

property by the amount of the section

Refigured for the AMT?

179 expense deduction is the same for

entity and its investors.

the regular tax and the AMT.

Generally, the corporation must refigure

•

Property described in sections

depreciation for the AMT, including

Optional Write-Off for

168(f)(1) through (4).

depreciation allocable to inventory

•

Qualified Indian reservation property.

costs, for:

Certain Expenditures

•

Qualified revitalization expenditures

Property placed in service after 1998

for a building for which the corporation

There is no AMT adjustment for the

depreciated for the regular tax using

elected to claim the commercial

following items if the corporation elects

the 200% declining balance method

revitalization deduction under section

(generally 3-, 5-, 7-, or 10-year property

to deduct them ratably over the period

1400I.

under the modified accelerated cost

of time shown for the regular tax.

recovery system (MACRS));

•

How Is Depreciation Refigured

Circulation expenditures (personal

•

Section 1250 property placed in

holding companies) — 3 years (section

for the AMT?

service after 1998 that is not

173).

depreciated for the regular tax using

Property placed in service after 1998.

•

the straight line method; and

Mining exploration and development

Use the same convention and recovery

•

costs — 10 years (sections 616(a) and

Tangible property placed in service

period used for the regular tax. Use the

after 1986 and before 1999. (If the

straight line method for section 1250

617(a)).

transitional election was made under

property. Use the 150% declining

•

Intangible drilling costs — 60 months

section 203(a)(1)(B) of the Tax Reform

balance method, switching to straight

(section 263(c)).

Act of 1986, this rule applies to property

line the first tax year it gives a larger

See section 59(e) for more details.

placed in service after July 31, 1986.)

deduction, for other property.

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Instructions For Form 4626 - 2003 Page 2

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