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Proposed guidance addresses broad range of CAMT issues
September 2024
In brief
What happened?
Treasury and the IRS today issued proposed regulations on the corporate alternative minimum tax (CAMT), which is a 15% minimum tax imposed on the adjusted financial statement income (AFSI) of certain corporations based on their applicable financial statements for applicable tax years beginning after 2022.
The IRS also issued Notice 2024-66, providing a limited waiver of the addition to tax under Section 6655(a) relating to the CAMT for a tax year that begins after December 31, 2023, and before January 1, 2025.
Why is it relevant?
Following a series of notices providing interim guidance on the CAMT, the proposed regulations set forth guidance on how the CAMT applies to certain taxpayers, particularly multinational groups, partnerships, and entities with complex tax structures. Certain provisions of the proposed regulations, if adopted, generally would apply to tax years ending after final regulations are published in the Federal Register. Other provisions of the proposed regulations would be effective for tax years ending after September 13, 2024, the expected date of publication of the proposed regulations in the Federal Register.
Notice 2024-66 incorporates the relief for CAMT estimated tax penalties provided in Notice 2024-33 and Notice 2024-47 and obsoletes those notices.
PwC will publish additional insights on the guidance in the coming days.
Actions to consider
Taxpayers should consider whether to submit comments on the proposed regulations. Comments are due by December 12, 2024, 90 days after the proposed regulations are published in the Federal Register. A public hearing is scheduled for January 16, 2025. They also should examine the specific effective dates that apply to the proposed regulations and previously issued interim guidance.
In detail
The proposed regulations include rules on the following items:
- Definitions and general rules for determining the AFSI of a CAMT entity
- Applicable financial statements (AFS)
- AFSI adjustments for AFS year and tax year differences
- AFSI adjustments and basis determinations with respect to foreign corporations
- Adjustments for partner’s distributive share of partnership AFSI
- Adjustments with respect to controlled foreign corporations
- Adjustments with respect to effectively connected income
- AFSI adjustments for certain federal and foreign income taxes
- AFSI adjustments for owners of disregarded entities or branches
- AFSI adjustments for cooperatives
- AFSI adjustments for Alaska Native Corporations
- AFSI adjustments with respect to certain tax credits
- AFSI adjustments for covered benefit plans
- AFSI adjustments for tax-exempt entities
- AFSI adjustments for Section 168 property including adjustments for depreciation and disposition of Section 168 property
- AFSI adjustments for qualified wireless spectrum
- AFSI adjustments to prevent certain duplications and omissions
- AFSI, CAMT basis, and CAMT retained earnings resulting from certain corporate transactions involving domestic corporations that are not members of the CAMT entity’s tax consolidated group
- AFSI adjustments to apply certain subchapter K principles
- AFSI adjustments for troubled companies
- AFSI adjustments for certain insurance companies and other specified industries
- AFSI adjustments for financial statement net operating losses and other attributes
- AFSI adjustments for hedging transactions and hedged items
- AFSI Adjustments for mortgage servicing income
- AFSI adjustments for certain related-party transactions and CAMT avoidance transactions
- AFSI adjustments for foreign governments
- General rules for determining applicable corporation status
- Rules for foreign-parented multinational groups
- Rules for determining the CAMT foreign tax credit
- Computation of tax liability of a tax consolidated group and computation of alternative minimum tax of consolidated groups
- Application of CAMT to consolidated groups
- CAMT entities subject to tonnage tax
- Transition rules and AFSI-only change procedures
See also
- Accounting Methods Spotlight Q2 2024 (June 27, 2024)
- Insight: IRS releases CAMT guidance for certain CFC distributions and additional rules for determining an AFS (December 15, 2023)
- Insight: Notice 2023-64 provides interim CAMT guidance on key issues (September 12, 2023)
- Insight: IRS addresses key insurance issues under the corporate alternative minimum tax (February 22, 2023)
- Insight: Interim guidance clarifies certain key issues under new corporate AMT (January 6, 2023)
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