Tax Insight

Interim rules deliver comprehensive relief for companies subject to the CAMT

Insight
5 minute read
February 26, 2026

What happened? 

In Notice 2026-7, Treasury and the IRS have provided additional interim guidance on the corporate alternative minimum tax (CAMT) that may reduce or eliminate CAMT exposure for many corporations. In addition to adding and expanding several adjustments used to compute adjusted financial statement income (AFSI), the notice provides guidance for financially troubled companies, modifies the anti-abuse rule for certain covered asset transactions involving foreign corporations, and addresses certain CAMT consequences related to outbound transfers of intangible property under Section 367(d). The guidance is effective February 18, 2026, and companies may rely on the interim guidance for tax years beginning before publication of proposed regulations.

Why is it relevant?

By closing the gap between book and tax treatment across several high-impact categories of expenditures, the notice removes much of the CAMT exposure that arose from common timing and capitalization mismatches. The retroactive impact of the notice in many cases could create the opportunity for companies that paid CAMT in prior years to file amended returns and recover CAMT already paid. The notice also addresses changes to domestic research or experimental (R&E) expenditures made by the One Big Beautiful Bill Act (OBBBA) and reinstates protections for companies emerging from bankruptcy.

Actions to consider

Notice 2026-7 marks a continuation of Treasury's sustained effort to provide guidance on the CAMT in response to public input. The cumulative effect of Notice 2026-7 and other interim guidance fundamentally reshapes the CAMT landscape so that many companies will either see a meaningful reduction or an elimination of their CAMT liabilities. Companies should move quickly to evaluate these adjustments, refresh CAMT models, and assess amendment opportunities for prior year returns. While the AFSI adjustments and other changes described in Notice 2026-7 generally are expected to be beneficial, a consistency rule makes it important for companies to assess the long-term implications of each adjustment. In addition, companies should consider whether application of these adjustments may trigger liability pursuant to the Undertaxed Profits Rule (UTPR) of the Pillar Two global tax regime.