Instructions For Form 4626 - Alternative Minimum Tax-Corporations

Line 3e. Do not include any adjustment

Line 4e. Do not include any adjustment

Line 5e. For any installment sale in a

related to the E&P effects of any

tax year that began after 1989, a

charitable contribution.

corporation generally cannot use the

installment method to figure ACE.

However, it may use the installment

Line 4. Disallowance of Items Not

Line 5. Other Adjustments

method for the applicable percentage

Deductible From E&P

Line 5a. Except as noted below, in

(as determined under section 453A) of

Generally, no deduction is allowed

figuring ACE, determine the deduction

the gain from any installment sale to

when figuring ACE for items not taken

for intangible drilling costs under section

which section 453A(a)(1) applies.

into account (see below) in figuring E&P

312(n)(2)(A).

Subtract the installment sale income

for the tax year. These amounts

Subtract the ACE expense (if any)

reported for AMT from the ACE income

increase ACE if they are deductible in

from the AMT expense (used to figure

from the sales and enter the result on

figuring pre-adjustment AMTI (that is,

line 2n of Form 4626) and enter the

line 5e. If the ACE income from the

they would be positive adjustments).

result on line 5a. If the ACE expense

sales is less than the AMT amount,

exceeds the AMT amount, enter the

enter the difference as a negative

However, there are exceptions. Do

result as a negative amount.

amount.

not add back:

Exception. The above rule does not

Any deduction allowable under

Line 6. Disallowance of Loss on

apply to amounts paid or incurred for

section 243 or 245 for any dividend that

any oil or gas well by corporations that

Exchange of Debt Pools

qualifies for a 100% dividends-received

are independent producers (that is, not

deduction under section 243(a), 245(b),

When figuring ACE, a corporation may

integrated oil companies as defined in

or 245(c);

not recognize any loss on the exchange

section 291(b)(4)). If this exception

Any dividend received from a

of any pool of debt obligations for any

applies, do not enter an amount on

20%-owned corporation (see section

other pool of debt obligations having

line 5a for oil and gas wells.

243(c)(2)), but only if the dividend is

substantially the same effective interest

from income of the paying corporation

Line 5b. When figuring ACE, the

rates and maturities. Add back (that is,

that is subject to federal income tax; and

current year deduction for circulation

enter as a positive adjustment) on line 6

Any allowable domestic production

expenditures under section 173 does

any such loss to the extent recognized

activities deduction under section 199.

not apply. Therefore, treat circulation

for the regular tax.

expenditures for ACE using the case

Special rules apply to certain

law that existed before section 173 was

Line 7. Acquisition Expenses of

dividends received by certain

enacted.

Life Insurance Companies for

cooperatives.

Subtract the ACE expense (if any)

Qualified Foreign Contracts

from the regular tax expense (for a

An item is considered taken into

For ACE, acquisition expenses of life

personal holding company, from the

account without regard to the timing of

insurance companies for qualified

AMT expense used to figure line 2d of

its deductibility in figuring

foreign contracts (as defined in section

Form 4626) and enter the result on

pre-adjustment AMTI or E&P.

807(e)(4) without regard to the

line 5b. If the ACE expense exceeds the

Therefore, only deduction items that are

treatment of reinsurance contract rules

regular tax amount (for a personal

permanently disallowed in figuring E&P

of section 848(e)(5)) must be capitalized

holding company, the AMT amount),

are disallowed in figuring ACE.

and amortized by applying the treatment

enter the result as a negative amount.

generally required under generally

Items for which no adjustment is

Do not make this adjustment for

accepted accounting principles (and as

necessary. Generally, no deduction is

expenditures for which the

if this rule applied to such contracts for

allowed for an item in figuring ACE if the

corporation elected the optional

all applicable tax years).

CAUTION

item is not deductible in figuring

3-year write-off under section 59(e) for

pre-adjustment AMTI (even if the item is

the regular tax.

Subtract the ACE expense (if any)

deductible in figuring E&P). The only

from the regular tax expense and enter

exceptions to this general rule are the

Line 5c. When figuring ACE, the

the result on line 7. If the ACE expense

related reductions to an income item

amortization provisions of section 248

is more than the regular tax expense,

described in the second sentence of the

do not apply. Therefore, charge all

enter the result as a negative amount.

instructions for line 3 above. Deductions

organizational expenditures to a capital

that are not allowed in figuring ACE

account and do not take them into

Line 8. Depletion

include:

account when figuring ACE until the

Capital losses that exceed capital

When figuring ACE, the allowance for

corporation is sold or otherwise

gains;

depletion for any property placed in

disposed of. Enter on line 5c all

Bribes, fines, and penalties

service in a tax year that began after

amortization deductions for

disallowed under section 162;

1989 generally must be determined

organizational expenditures that were

Charitable contributions that exceed

under the cost depletion method.

taken for the regular tax during the tax

the limitations of section 170;

year.

Meals and entertainment expenses

Subtract the ACE expense (if any)

Line 5d. The LIFO inventory

that exceed the limitations of section

from the AMT expense (used to figure

adjustments provided in section 312(n)

274;

line 2l of Form 4626) and enter the

(4) apply in figuring ACE. See

Federal taxes disallowed under

result on line 8 of the worksheet. If the

Regulations section 1.56(g)-1(f)(3).

section 275; and

ACE expense is more than the AMT

Golden parachute payments that

amount, enter the result as a negative

exceed the limitation of section 280G.

amount.

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Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2017 Page 10

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