Corporate AMT: Unanswered questions about its foreign tax credit
On Dec. 27, 2022, Treasury and the IRS released Notice 2023-7, which provides taxpayers with interim guidance on the corporate AMT. Taxpayers may rely on the guidance provided in Sections 3 through 7 of the notice until the issuance of forthcoming proposed regulations.
The basics of the corporate AMT Under the act, an applicable corporation’s AMT is equal to the amount by which the tentative minimum tax exceeds the sum of the corporation’s regular U.S. federal income tax liability, plus its liability for the base-erosion and anti-abuse tax. The corporation’s tentative minimum tax is a 15% tax on its AFSI for the tax year (computed taking into account financial statement net operating losses (NOLs)), to the extent it exceeds the corporate AMT FTC for the tax year.
As under the rules applicable to the regular corporate income tax, AFSI may be reduced by financial statement NOLs, not to exceed 80% of AFSI, determined before taking into account such NOLs. Financial statement NOLs are determined by taking into account adjusted financial statement losses for tax years ending after Dec. 31, 2019.