Key highlights of the CAMT proposed regulations

In brief

What happened?

Treasury and the IRS on September 12, 2024, issued proposed regulations on the application of the corporate alternative minimum tax (CAMT). Enacted in 2022, the Inflation Reduction Act (IRA) imposes a 15% minimum tax based on the adjusted financial statement income (AFSI) of an ‘applicable corporation.’ The CAMT is effective for tax years beginning after December 31, 2022. 

The IRS also issued Notice 2024-66, which incorporates the relief for CAMT estimated tax penalties provided in Notice 2024-33 and Notice 2024-47 by waiving the addition to tax under Section 6655(a) relating to the CAMT for a tax year that begins after December 31, 2023, and before January 1, 2025. 

Why is it relevant

Spanning more than 600 pages, the proposed regulations expand on the interim guidance issued in Notice 2023-7, Notice 2023-20, Notice 2023-64, and Notice 2024-10 by providing detailed rules and examples on AFSI adjustment computations, such as those required for depreciation and amortization, identifying applicable corporations that are subject to the CAMT, as well as other important topics, including special rules for controlled foreign corporations (CFCs), foreign-parented multinational groups (FPMGs), consolidated groups, and partnerships with corporate partners. The proposed regulations introduce many new defined terms and attributes that taxpayers will need to track.  

The issuance of the proposed regulations coincides with the finalization of the federal income tax returns of corporations for the 2023 tax year and just before the due date of the third quarterly installment of estimated federal income taxes for the 2024 calendar tax year. 

This PwC Insight provides key highlights of the proposed regulations – look for additional PwC Insights in the coming days that will provide further analysis of the new rules. 

Action to consider

Taxpayers and other affected entities should examine how the complex rules set forth in the proposed regulations may affect positions taken in previous tax years that were based on the interim guidance or a reasonable interpretation of the statute. Although the effective date for many provisions of the proposed regulations is for tax years ending after September 13, 2024, other provisions will not be effective until publication of final regulations in the Federal Register. Treasury and the IRS are requesting comments on several specific topics. Taxpayers should consider submitting comments on key issues by December 12, 2024, or to request to speak at a hearing scheduled for January 16, 2025. 

PwC professionals will discuss the CAMT guidance on a Tax Readiness webcast on October 8, 2024 [Register here].