Instructions For Form 4626 - Alternative Minimum Tax-Corporations

For the regular tax, circulation

The AMT gain is less than the regular

No loss is allowed except to the

expenditures may be deducted in full

tax gain.

extent the personal service corporation

when paid or incurred. For the AMT,

The AMT loss exceeds the regular

is insolvent.

these expenditures must be capitalized

tax loss.

Do not use a loss in the current tax

and amortized over 3 years beginning

The corporation has an AMT loss and

year to offset gains from other tax

with the tax year in which the

a regular tax gain.

shelter farm activities. Instead, suspend

expenditures were made.

any loss and carry it forward indefinitely

Line 2f. Long-Term Contracts

until the corporation has a gain in a

If the corporation had a loss on

For the AMT, the corporation generally

subsequent tax year from that same tax

property for which circulation

must use the percentage-of-completion

shelter farm activity or it disposes of the

expenditures have not been fully

method described in section 460(b) to

activity.

amortized for the AMT, the AMT

determine the taxable income from any

deduction is the smaller of (a) the loss

Keep adequate records for

long-term contract (defined in section

allowable for the expenditures had they

losses that are not deductible

460(f)). However, this rule does not

TIP

remained capitalized, or (b) the

(and therefore carried forward)

apply to any home construction contract

remaining expenditures to be amortized

for both the AMT and regular tax.

(as defined in section 460(e)(6)).

for the AMT.

For contracts excepted from the

Enter on line 2i the difference

Subtract the AMT deduction from the

percentage-of-completion method for

between the AMT gain or loss and the

regular tax deduction. Enter the result

the regular tax by section 460(e)(1),

regular tax gain or loss. Enter the

on line 2d. If the AMT deduction is more

determine the percentage of completion

difference as a negative amount if the

than the regular tax deduction, enter the

using the simplified procedures for

corporation had:

difference as a negative amount.

allocating costs outlined in section

An AMT loss and a regular tax gain,

Line 2e. Adjusted Gain or Loss

460(b)(3).

An AMT loss that exceeds the regular

tax loss, or

If, during the tax year, the corporation

Subtract the regular tax income from

A regular tax gain that exceeds the

disposed of property for which it is

the AMT income. Enter the difference

AMT gain.

making (or previously made) any of the

on line 2f. If the AMT income is less than

adjustments described on lines 2a

Line 2j. Passive Activities

the regular tax income, enter the

through 2d above, refigure the

difference as a negative amount.

property's adjusted basis for the AMT.

This adjustment applies only to

Line 2g. Merchant Marine

Then refigure the gain or loss on the

closely held corporations and

disposition.

Capital Construction Funds

personal service corporations.

CAUTION

The property's adjusted basis for the

Amounts deposited in these funds are

Refigure all passive activity gains and

AMT is its cost minus all applicable

not deductible for the AMT. Earnings on

losses reported for the regular tax by

depreciation or amortization deductions

these funds must be included in gross

taking into account the corporation's

allowed for the AMT during the current

income for the AMT. If the corporation

AMT adjustments and preferences and

tax year and previous tax years.

deducted these amounts or excluded

AMT prior year unallowed losses that

Subtract this AMT basis from the sales

them from income for the regular tax,

apply to that activity.

price to get the AMT gain or loss.

add them back on line 2g.

Determine the corporation's AMT

Dispositions for which lines 2i, 2j,

Line 2h. Section 833(b)

passive activity gain or loss using the

and 2k adjustments are made. The

Deduction

same rules used for the regular tax.

corporation may also have gains or

Generally, no loss is allowed. However,

This deduction is not allowed for the

losses from lines 2i, 2j, and 2k that must

if the corporation is insolvent, special

AMT. If the corporation took this

be considered on line 2e. For example,

rules apply. See section 58(c).

deduction for the regular tax, add it back

if for the regular tax the corporation

on line 2h.

Disallowed losses of a personal

reports a loss from the disposition of an

service corporation are suspended until

asset used in a passive activity, include

Line 2i. Tax Shelter Farm

the corporation has income from that (or

the loss in the computations for line 2j to

Activities

any other) passive activity or until the

determine if any passive activity loss is

passive activity is disposed of. That is,

limited for the AMT. Then, include the

Complete this line only if the

its passive losses cannot offset “net

AMT passive activity loss allowed that

corporation is a personal

active income” (defined in section

relates to the disposition of the asset on

service corporation and it has a

CAUTION

469(e)(2)(B)) or “portfolio income.”

line 2e in determining the corporation's

gain or loss from a tax shelter farm

Disallowed losses of a closely held

AMT basis adjustment. It may be helpful

activity that is not a passive activity. If

corporation that is not a personal

to refigure the following for the AMT:

the tax shelter farm activity is a passive

service corporation are treated the

activity, include the gain or loss in the

Form 8810, Corporate Passive Activity

same except that, in addition, they may

computations for line 2j.

Loss and Credit Limitations, and related

be used to offset “net active income.”

worksheets; Schedule D (Form 1120),

Refigure all gains and losses reported

Capital Gains and Losses; Section B of

Keep adequate records for

for the regular tax from tax shelter farm

Form 4684, Casualties and Thefts; or

losses that are not deductible

activities by taking into account any

TIP

Form 4797, Sale of Business Property.

(and therefore carried forward)

AMT adjustments and preferences.

Enter on line 2e the difference

for both the AMT and regular tax.

Determine the AMT gain or loss using

between the regular tax gain or loss and

the rules for the regular tax with the

the AMT gain or loss. Enter the

Enter on line 2j the difference

following modifications.

difference as a negative amount if any

between the AMT gain or loss and the

of the following apply.

regular tax gain or loss. Enter the

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Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2017 Page 4

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