In brief

Notice 2023-20, released earlier today, provides additional interim guidance relating to the new corporate alternative minimum tax (CAMT), which was imposed by the Inflation Reduction Act. This interim guidance is intended to “help avoid substantial unintended adverse consequences to the insurance industry” from the application of the CAMT.

Broadly, Notice 2023-20 addresses issues that are integral to determining “adjusted financial statement income” of insurance companies that are “applicable corporations” for purposes of computing the CAMT. In particular, Notice 2023-20 addresses the treatment of variable contracts and other similar contracts, funds withheld reinsurance and modified coinsurance agreements, and the asset basis for gain or loss purposes of certain formerly tax-exempt entities whose exemption from federal income tax was repealed by statute.

These and other issues are intended to be addressed by forthcoming proposed regulations, which would be proposed to apply to tax years beginning after December 31, 2022. However, Notice 2023-20 states that taxpayers may rely on this guidance until the issuance of the proposed regulations. Comments are requested on the issues included in Notice 2023-20 by April 3, 2023.

PwC will publish a detailed analysis of Notice 2023-20 within the coming days.

See also

Interim guidance clarifies certain key issues under new corporate AMT