A Guide to the Proposed Regulations

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted into law. Among other changes to the Internal Revenue Code of 1986, as amended (the “Code”), the IRA revived and reimagined the corporate alternative minimum tax (the “CAMT”). In enacting the CAMT, Congress was focused on the phenomenon of very large publicly traded corporations with significant accounting earnings paying little or no tax. In general, the CAMT imposes a 15% corporate alternative minimum tax on the adjusted financial statement income (“AFSI”) of certain large corporations for tax years beginning after December 31, 2022. The decision by Congress to have the CAMT calculated based on book income rather than taxable income creates significant complexity, and Congress delegated substantial authority to the Department of Treasury (the “Treasury”) to fill gaps in the legislation. On September 12, 2024, the Treasury and the Internal Revenue Service (the “IRS”) issued long-awaited proposed regulations (89 FR 75062) (the “Proposed Regulations”) on the application of the CAMT.

The Treasury has requested comments on the Proposed Regulations by January 16, 2025, and a hearing is also scheduled for that date.