Preparing Your Tax Return(s) and Information Returns
Business Taxes
Alternative Minimum Tax - Corporations
The tax laws give special treatment to some types of income and allow special deductions
and credits for some types of expenses. These laws enable some corporations with
substantial economic income to significantly reduce their regular tax. The purpose of the
corporate alternative minimum tax (AMT) is to ensure that these corporations pay a
minimum amount of tax on their economic income. A corporation owes AMT if its tentative
minimum tax is more than its regular tax.
The tentative minimum tax of a small corporation is zero. This means that
a small corporation will not owe AMT.
Small corporation exemption. A corporation
is treated as a small corporation exempt from the AMT for its current tax year if that year is the
corporation’s first tax year in existence (regardless of its gross receipts
for the year) or:
- it was treated as a small corporation
exempt from the AMT for all prior tax years beginning after 1997, and
-
its average annual gross receipts for the 3-tax-year period (or portion
thereof during which the corporation was in existence) ending before
its current tax year did not exceed $7.5 million ($5 million
if corporation
had only 1 prior tax year).
For more information, see the Instructions
for Form 4626.
Use Form
4626 to figure the tentative minimum
tax of a corporation that is not a small corporation for AMT purposes.
Important References:
Publication
542 Corporations
Form
4626
Alternative Minimum Tax - Corporations
Instructions
for Form 4626
