IRS Provides Interim Simplified Method for Corporate Alternative Minimum Tax
The IRS recently issued Notice 2025-27, providing interim guidance on the application of the Sec. 55 corporate alternative minimum tax (CAMT), which was enacted by the Inflation Reduction Act of 2022.
The guidance offers an optional simplified method for determining applicable corporation status under Sec. 59(k). The method substitutes the general adjusted financial statement income (AFSI) and foreign-parented multinational group (FPMG) AFSI test thresholds with $800 million and $80 million, respectively. The method calculates AFSI by using the AFSI adjustments outlined in Prop. Regs. Sec. 1.56A-12 as well as other AFSI adjustments.
The IRS also stated in the notice that it will waive the additional tax for an applicable corporation’s underpayment of estimated tax under Sec. 6655 with respect to a corporation’s alternative minimum tax liability under Sec. 55 for the 2025 tax year.
In September, the IRS issued proposed regulations REG-112129-23 regarding the application of the CAMT. Prior to issuing the proposed regulations, the IRS had issued Notices 2023-7, 2023-20, 2023-64 and 2024-10 to provide interim guidance. September’s proposed regulations included rules incorporating and expanding on the interim guidance.
The IRS stated that it will propose new regulations incorporating the simplified method as well as update Forms 4626, 1120 and 2220.
The CAMT originally imposed a 15% minimum tax based on book income on corporations with AFSI of over $1 billion beginning after Dec. 31, 2022.