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Simplified Method for Determining Applicable Corporation Status For the first tax year beginning after 2022, a corporation may choose to apply the safe harbor method (simplified method) for purposes of determining whether it is an applicable corporation.
Based on IRS Form 4626 instruction, taxpapers can choose to apply the safe harbor method (simplified method) if qualifies. IRS clarifies rules for new corporate alternative minimum tax generally applies to large corporations with average annual financial statement income exceeding $1 billion.
Applying the simplified method will allow some corporations to avoid many of the complex and time-consuming adjustments required to convert financial statement net income to AFSI when making the determination of whether the corporation is an applicable corporation that may be subject to the CAMT.
The draft instructions provide a safe harbor, simplified method for determining if a corporation is an applicable corporation. Corporations that choose to apply the simplified method and are not an applicable corporation under the safe harbor are not required to file Form 4626 for the first tax year beginning after 2022.
Draft instructions detail a safe harbor, simplified method for determining if a corporation is affected by the AMT. Corporations not classified as "applicable corporations" under this safe harbor do not need to file Form 4626 for the first tax year post-2022.
The guidance covers some issues that taxpayers have been waiting for, such as a simplified method for determining whether an entity constitutes an "applicable corporation" and the depreciation adjustment for IRC Section 168 (MACRS) property.
The Notice also provides a simplified “safe harbor” method for determining if a corporation is subject to the CAMT and clarifies how an interest in a partnership is treated for determining whether a taxpayer is subject to the CAMT.
Purpose of Form. For tax years beginning after 2022, Form 4626 is used to determine whether a corporation is an applicable corporation under section 59(k) and to calculate CAMT under section 55 for applicable corporations. Consolidated returns.
The IRS released the final Form 4626, “Alternative Minimum Tax—Corporations,” [PDF 306 KB] and accompanying instructions [PDF 228 KB] for the new corporate alternative minimum tax (CAMT) created by Pub. L. No. 117-169 (commonly called the “Inflation Reduction Act of 2022” (IRA)), which is effective for tax years beginning after ...
Starting with tax year 2023, most corporations, including tax-exempt corporations, will need to complete and file IRS Form 4626 to determine whether they are an applicable corporation. Applicable corporations then must determine whether they have a CAMT liability. S-Corporations are not subject to CAMT.