Treasury and IRS Issue Interim Guidance on Corporate Alternative Minimum Tax

December 27, 2022

The Treasury Department and IRS recently issued Notice 2023-07 providing interim guidance regarding the application of the new corporate alternative minimum tax (CAMT) until the issuance of proposed regulations.

The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after Dec. 31, 2022. The CAMT generally applies to large corporations with average annual financial statement income exceeding $1 billion. The Treasury and IRS have issued Notice 2023-7 to provide certainty to taxpayers in advance of the CAMT effective date.

The notice clarifies which corporations the CAMT applies to and how the alternative minimum tax is calculated. It also provides taxpayers with answers to basic questions about how certain transactions may be treated and certain adjustments that may be taken into account for purposes of the alternative minimum tax, including adjustments for depreciation and certain tax credits. It also gives smaller corporations an easy method for determining that the new alternative minimum tax does not apply to them.

Notice 2023-7 also solicits comments on the rules contained in the notice and other issues under consideration. The Treasury and IRS recommend comments be submitted within 60 days of the date on which the notice is published in the Internal Revenue Bulletin.