IRS issues initial guidance on corporate alternative minimum tax

In brief

The recently enacted Inflation Reduction Act imposes a corporate alternative minimum tax (CAMT) based on financial statement income of “applicable corporations.” The CAMT is effective for tax years beginning after December 31, 2022. Today, the IRS and Treasury released Notice 2023-7, announcing their intention to issue proposed regulations addressing the application of the new CAMT. Notice 2023-7 provides interim guidance regarding certain time-sensitive issues that are intended to be addressed in the proposed regulations. The notice states that the IRS and Treasury plan to issue additional interim guidance addressing other CAMT issues before publishing proposed regulations.

Notice 2023-7 includes rules about the application of CAMT to corporations, certain partnerships, troubled corporations, and affiliated groups of corporations that file consolidated tax returns, and rules for determining CAMT adjustments for the depreciation of property to which Section 168 applies and the treatment of certain federal income tax credits. The notice provides a safe harbor method for determining whether a corporation is an applicable corporation that is subject to the CAMT.

Notice 2023-7 states that taxpayers may rely on the interim guidance until publication of regulations, which would be proposed to apply for tax years beginning after December 31, 2022.

PwC will publish a detailed analysis of Notice 2023-7 within the coming days. Look for information on a forthcoming Tax Readiness series webcast on this guidance.