Corporate AMT proposed regulations issued; some penalties waived

The IRS on Thursday issued proposed regulations (REG-112129-23) addressing the application of the Sec. 55 corporate alternative minimum tax (AMT) as amended by the Inflation Reduction Act of 2022, P.L. 117-169. The Service also issued a notice further delaying the application of the penalty for failure to pay estimated tax with respect to the corporate AMT.

The proposed regulations provide guidance on determining if a corporation is subject to the corporate AMT, including rules for members of a foreign-parented multinational group and the determination of the corporate AMT foreign tax credit. The regulations also provide definitions and general rules for determining and identifying adjusted financial statement income (AFSI) and rules regarding certain statutory and regulatory adjustments in determining AFSI.

Additionally, the proposed regulations address the application of the corporate AMT to affiliated corporations filing a consolidated income tax return.

The Inflation Reduction Act created the corporate AMT, which imposes a 15% minimum tax based on book income rather than taxable income on corporations with AFSI of more than $1 billion beginning after Dec. 31, 2022. Treasury estimates that approximately 100 of the largest U.S. corporations will pay the corporate AMT annually.

The IRS previously issued Notice 2023-7, Notice 2023-20, Notice 2023-64, and Notice 2024-10 to provide interim guidance on the corporate AMT. The proposed regulations issued Thursday include rules incorporating and expanding on the interim guidance.

Written or electronic comments on the proposed regulations must be received by Dec. 12, 2024. A public hearing on the proposal is scheduled for Jan. 16, 2025.

Penalty waiver for 2024

The IRS also issued Notice 2024-66, which waives the penalty for a corporation’s failure to pay estimated tax with respect to its corporate AMT for a tax year that begins after Dec. 31, 2023, and before Jan. 1, 2025.

AICPA advocacy

The AICPA previously submitted comments to the IRS on needed corporate AMT guidance on Oct. 14, 2022, March 27, 2023, and Dec. 14, 2023. The AICPA also plans to submit comments on the proposed regulations.

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.