Treasury and IRS release long-anticipated CAMT proposed regulations

On Sept. 12, 2014, the Treasury and the IRS released long-awaited proposed regulations covering the corporate alternative minimum tax (CAMT). The 604-page proposed regulations and the accompanying Notice 2024-66 shed light on several important questions, which are outlined below.

Q: What is needed to document that a taxpayer has satisfied the Notice 2023-7 simplified method safe harbor and thus is not an applicable corporation required to file Form 4626?

A: The regulatory rules below require “books and records sufficient to demonstrate” eligibility for the simplified method and applicable corporation determinations.  

Specifically, the rules under treasury regulation section 1.56A-1(g)(1) provide:

“(i) Substantiation requirement: A corporation (other than an S corporation, a regulated investment company or a real estate investment trust) must maintain books and records sufficient to demonstrate whether it is an applicable corporation for any taxable year, including the identification of all persons treated as a single employer with such corporation under section 52(a) or (b) and whether the corporation is a member of [a foreign-parented multinational group] under §1.59-3. See §1.6001-1(a).” and

“(j) Reporting requirement: A corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) that does not satisfy the simplified method under paragraph (g) of this section must provide information to demonstrate whether it is an applicable corporation, in such form and manner as Form 4626, Alternative Minimum Tax-Corporations (or any successor form), the Federal income tax return required to be filed by such corporation, or their respective instructions prescribe. See §§1.6011-1 and 601.602 of this chapter.”

Q: Can a partnership be penalized if it doesn’t respond to a request to provide information required to help determinate a partner’s distributive share for CAMT adjusted financial statement income (AFSI) purposes?

A: Yes, a partnership can face penalties under section 6031(b) for failing to help estimate data requested by a partner.   

Specifically, the rules under treasury regulation section 1.56A-5(i) provides: