The Inflation Reduction Act of 2022, signed into law on August 16, 2022, created a new corporate alternative minimum tax (CAMT) for taxable years beginning after December 31, 2022. Following the September 12, 2024, release of the proposed CAMT regulations, Treasury and the IRS released technical corrections on the proposed CAMT regulations on December 23, 2024.
The technical corrections generally correct typographical errors, but the corrections also make more substantive changes and eliminate discrepancies between the rules and their examples. The technical corrections are consistent with commentary made by Treasury and IRS officials since the release of the proposed CAMT regulations. The comment period on the proposed CAMT regulations was extended to January 16, 2025.
Notable Corrections
In order to properly reflect Treasury and the IRS’s intent, the technical corrections clarify that the CAMT basis of the asset is used in amortizing or depreciating property not subject to the rules governing adjusted financial statement income (AFSI) for Section 168 property or for qualified wireless spectrum property. In particular, if income, expense, gain, or loss is recognized for AFSI purposes and the CAMT basis of an asset is different from its AFS basis, then such income, expense, gain, or loss reflected in financial statement income is redetermined for AFSI purposes by reference to the CAMT basis.
The technical corrections provide that the adjustments applicable to tax-exempt entities are taken into account in applying the safe harbor method for determining applicable corporation status.
In addition, the technical corrections make clear that a Section 351 transferee determines its CAMT basis in assets acquired in a Section 351 transaction under Section 362—i.e., by reference to the CAMT basis in the assets in the hands of the Section 351 transferor—increased by the regular tax gain recognized by the Section 351 transferor where (i) the Section 351 transferor is not an applicable corporation and (ii) the Section 351 transferee is an applicable corporation that issues a de minimis amount of boot in the Section 351 transaction. For this purpose, boot is de minimis if it is less than 10% of the fair market value of the assets transferred to the Section 351 transferee.
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