IRS issues proposed regulations for Corporate Alternative Minimum Tax

The IRS has issued proposed regulations to provide guidance on the Corporate Alternative Minimum Tax (CAMT). 

The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations for taxable years beginning after Dec. 31, 2022. The CAMT generally applies to large corporations with an average annual AFSI exceeding $1 billion. 

The proposed regulations provide definitions and general rules for determining and identifying AFSI. They also include rules regarding various statutory and regulatory adjustments in determining AFSI; determining if a corporation is subject to the CAMT, including rules for members of a foreign parented multinational group (FPMG) and the determination of the CAMT foreign tax credit. 

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

Previously the IRS issued Notice 2023-07, Notice 2023-20, Notice 2023-64 and Notice 2024-10, to provide interim guidance on the CAMT. The proposed regulations issued include rules incorporating this interim guidance. 

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