Treasury and IRS Provide Interim Guidance on Alternative Minimum Tax
The U.S. Treasury Department and the IRS recently issued Notice 2023-20, providing interim guidance for insurance companies and certain other taxpayers for the new corporate alternative minimum tax (CAMT) until proposed regulations are issued.
The notice provides interim guidance for the determination of adjusted financial statement income as it relates to (1) variable contracts and similar contracts, (2) funds withheld reinsurance and modified coinsurance agreements and (3) the basis of certain assets held by certain previously tax-exempt entities that received a "fresh start" basis adjustment.
The Inflation Reduction Act of 2022 created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning in 2023. Corporations with average annual adjusted financial statement income exceeding $1 billion are the taxpayers generally affected. The Treasury and the IRS have issued Notice 2023-20 to provide certainty to insurance companies and certain other taxpayers.
Additionally, the notice solicits comments on the rules contained in the notice and certain other issues under consideration. The Treasury and the IRS recommend comments be submitted by April 3, 2023.