Instructions For Form 4626 - Alternative Minimum Tax-Corporations

depreciation by using the property's

determining the corporation's

Adjusted Current Earnings

AMT adjusted basis as of the close of

pre-adjustment AMTI but is taken into

(ACE) Worksheet

the last tax year beginning before 1990

account in determining its E&P must be

and by using the straight line method

included in ACE. Any such income item

Instructions

over the remainder of the recovery

can be reduced by all items related to

Treatment of Certain

period for the property under ADS. In

that income item that would be

doing so, use the convention that would

deductible when figuring pre-adjustment

Ownership Changes

have applied to the property under

AMTI if the income items to which they

If a corporation with a net unrealized

section 168(d). For more information

relate were included in the corporation's

built-in loss (within the meaning of

(including an example that illustrates the

pre-adjustment AMTI for the tax year.

section 382(h)) undergoes an

application of these rules), see

Examples of these income items and

ownership change (within the meaning

Regulations section 1.56(g)-1(b)(2).

the adjustments that relate to them

of section 382(g) and Regulations

include:

Line 2b(4). Pre-1990 original ACRS

section 1.56(g)-1(k)(2)), refigure the

Interest income from tax-exempt

property. For ACRS property generally

adjusted basis of each asset of the

obligations excluded under section 103

placed in service in a tax year that

corporation (immediately after the

minus any costs incurred in carrying

began after 1980 and before 1987,

ownership change). The new adjusted

these tax-exempt obligations and

figure depreciation by using the

basis of each asset is its proportionate

Proceeds of life insurance contracts

property's regular tax adjusted basis as

share (based on respective fair market

excluded under section 101 minus the

of the close of the last tax year

values) of the fair market value of the

basis in the contract for purposes of

beginning before 1990 and by using the

corporation's assets (determined under

ACE.

straight line method over the remainder

section 382(h)) immediately before the

of the recovery period for the property

ownership change.

An income item is considered taken

under ADS. In doing so, use the

into account without regard to the timing

To determine if the corporation has a

convention that would have applied to

of its inclusion in a corporation's

net unrealized built-in loss immediately

the property under section 168(d)

pre-adjustment AMTI or its E&P. Only

before an ownership change, use the

(without regard to section 168(d)(3)).

income items that are permanently

aggregate adjusted basis of its assets

For more information (including an

excluded from pre-adjustment AMTI are

used for figuring its ACE. Also, use

example that illustrates the application

included in ACE. An income item will not

these new adjusted bases for all future

of these rules), see Regulations section

be considered taken into account

ACE calculations (such as depreciation

1.56(g)-1(b)(3).

merely because the proceeds from that

and gain or loss on disposition of an

item might eventually be reflected in the

Line 2b(5). Property described in

asset).

pre-adjustment AMTI of another

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

taxpayer (for example, that of a

this property, use the regular tax

Line 2. ACE Depreciation

shareholder) on the liquidation or

depreciation, regardless of when the

Adjustment

disposal of a business.

property was placed in service.

Exceptions. Do not make an

Line 2a. AMT depreciation.

Line 2b(5) takes priority over

adjustment for the following.

Generally, the amount entered on this

lines 2b(1), 2b(2), 2b(3), and

Any income from discharge of

line is the depreciation the corporation

2b(4). For property that is

CAUTION

indebtedness excluded from gross

claimed for the regular tax (Form 4562,

described in sections 168(f)(1) through

income under section 108 (or the

line 22), modified by the AMT

(4), use line 2b(5) instead of the

corresponding provision of prior law).

depreciation adjustments reported on

line 2b(1), 2b(2), 2b(3), or 2b(4) that

For an insurance company taxed

lines 2a and 2o of Form 4626.

would otherwise apply.

under section 831(b), any amount not

Line 2b(1). Post-1993 property. For

included in gross investment income (as

Line 2b(6). Other property. Use the

property placed in service after 1993,

regular tax depreciation for (a) property

defined in section 834(b)).

the ACE depreciation is the same as the

placed in service before 1981 and (b)

Any special subsidy payment for

AMT depreciation. Therefore, enter on

property placed in service after 1980, in

prescription drug plans excluded from

line 2b(1) the same depreciation

a tax year that began before 1990, that

gross income under section 139A.

expense you included on line 2a of this

is excluded from MACRS by section

Any qualified shipping income

worksheet for such property.

168(f)(5)(A)(i) or original ACRS by

excluded under section 1357.

section 168(e)(4), as in effect before the

Tax-exempt interest on certain

Line 2b(2). Post-1989, pre-1994

Tax Reform Act of 1986.

housing bonds issued after July 30,

property. For property placed in

2008, excluded under section 57(a)(5)

service in a tax year that began after

Line 2c. Total ACE depreciation.

(C)(iii).

1989 and before 1994, use the ADS

Subtract line 2b(7) from line 2a and

Tax-exempt interest on certain

depreciation described in section

enter the result on line 2c. If line 2b(7)

private activity bonds issued in 2009

168(g). However, for property (a) placed

exceeds line 2a, enter the difference as

and 2010. Special rules apply to

in service in a tax year that began after

a negative amount.

refunding bonds. See section 56(g)(4)

1989 and (b) described in sections

(B)(iv).

168(f)(1) through (4), use the same

Line 3. Inclusion in ACE of Items

depreciation claimed for the regular tax

Line 3d. Include in ACE the income on

Included in Earnings and Profits

and enter it on line 2b(5).

life insurance contracts (as determined

(E&P)

under section 7702(g)) for the tax year

Line 2b(3). Pre-1990 MACRS proper-

minus the part of any premium

ty. For MACRS property generally

In general, any income item that is not

attributable to insurance coverage.

placed in service after 1986 and in a tax

taken into account (see below) in

year that began before 1990, figure

-9-

Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2017 Page 9

Related Articles

Related forms

Related Categories