New simplified method for determining status for Corporate Alternative Minimum Tax

More In Forms and Instructions

The corporate alternative minimum tax (CAMT) applies to corporations based on their adjusted financial statement income (AFSI). Only “applicable corporations” pay the CAMT.

Generally, if a corporation is not a member of a foreign-parented multinational group (FPMG) for any tax year, the corporation is an applicable corporation for a tax year if its average annual AFSI (with certain specific adjustments) for the 3-taxable-year period ending with the tax year exceeds $1 billion (general AFSI test). If a corporation is a member of an FPMG for any tax year, the corporation is an applicable corporation if it meets the general AFSI test for the tax year (determined after applying the special rule applicable to an FPMG member) and the corporation's average annual AFSI (determined without regard to the special rule and other adjustments) for the 3-tax-year period ending with the tax year is $100 million or more (together, the FPMG AFSI test). 

Notice 2025-27 provides an optional interim simplified method for determining whether a taxpayer is an applicable corporation by lowering the $1 billion and $100 million threshold amounts provided for the general AFSI test and the FPMG AFSI test to $800 million and $80 million, respectively. If a corporation's average annual AFSI for the 3-tax-year period ending with the current tax year (with modifications appropriate for each test) falls below the threshold amounts applicable to the corporation, the corporation is not an applicable corporation in the current year, provided it was not an applicable corporation in a prior year.  The corporation should indicate "Yes" to Form 1120, U.S. Corporation Income Tax Return, Schedule K, Question 29(c) and is not required to file Form 4626, Alternative Minimum Tax—Corporations.

A corporation may use the interim simplified method for any taxable year for which the original Federal income tax return has not been filed as of June 23, 2025.  Prior to the publication of final CAMT regulations, the Treasury Department and the IRS intend to issue new proposed regulations that would incorporate rules similar to the interim simplified method.