8962 / Are C corporations subject to the alternative minimum tax? How is the corporate alternative minimum tax calculated?

Editor’s Note:The 2017 tax reform legislation eliminated the corporate AMT.¹ Corporate taxpayers with existing AMT credit from a prior year may offset regular tax liability with the credit for any taxable year. Existing AMT credits will be refundable for tax years after 2017 and before 2022 in an amount equal to 50percent (100percent before 2021) of the excess of the minimum tax credit for the taxable year over the amount of the credit allowable for the year against regular tax liability (this basically means that the full amount of the credit was available before 2022).² See heading below for modification of this treatment under the 2020 CARES Act. The discussion below generally applies for tax years beginning before 2018 unless otherwise noted. See Q for a discussion of the Inflation Reduction Act’s corporate alternative minimum tax.

Prior to 2018, a corporate taxpayer was required to calculate its liability under the regular tax and a tentative minimum tax, and then add to its regular tax the amount of tentative minimum tax as exceeds the regular tax. The amount added was the corporate alternative minimum tax (AMT).³

To calculate its AMT, a corporation first calculated its “alternative minimum taxable income” (AMTI), as explained below.⁴ The corporation then calculated its “adjusted current earnings” (ACE), also explained below. The corporation increased its AMTI by 75 percent of the amount by which ACE exceeded AMTI (or reduced its AMTI by 75 percent of the amount by which AMTI exceeded ACE).⁵ The tax itself was a flat 20 percent rate, applied to the corporation’s AMTI after it was adjusted based on ACE.⁶