IRS clarifies new corporate alternative minimum tax

The Department of the Treasury and the Internal Revenue Service have issued Notice 2023-64 to provide additional interim guidance for corporations to determine whether the new corporate alternative minimum tax applies to them and how to compute the tax.

The notice clarifies and supplements Notice 2023-07 and Notice 2023-20, which were issued earlier this year. 

The Inflation Reduction Act created the CAMT, a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning Jan. 1 of this year. The CAMT generally applies to large corporations with an average annual financial statement income exceeding $1 billion.

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Considering the challenges of determining CAMT liability, Notice 2023-42 says the IRS will waive the penalty for a corporation's estimated income tax with respect to its CAMT for a taxable year that begins after Dec. 31, 2022, and before Jan. 1, 2024.

Among other information, the notice provides a list of financial statements that meet the definition of an applicable financial statement as well as priority rules for identifying a taxpayer's AFS. The guidance also provides general rules for determining a taxpayer's financial statement income and adjusted financial statement income (AFSI), including when the taxpayer's financial results are reported on a consolidated financial statement.

Finally, the notice includes guidance on when businesses are subject to CAMT, CAMT foreign tax credits, tax consolidated groups, foreign corporations, depreciable property, wireless spectrum, duplications and omissions of certain items, and financial statement net operating losses.