United States: Notice 2023-64 Supplements CAMT Guidance

IRS and Treasury modify and supplement rules in Notice describing anticipated proposed regulations

In brief

On September 12, 2023, the Treasury Department ("Treasury") and the Internal Revenue Service (IRS) released Notice 2023-64 ("Notice"), which provides additional interim guidance on the Corporate Alternative Minimum Tax (CAMT). The Notice follows the release of interim guidance issued in Notice 2023-7 (see our client alert on Notice 2023-7: United States: IRS releases initial interim guidance on new corporate alternative minimum tax), Notice 2023-20 (providing guidance related to the insurance industry), and Notice 2023-42 (providing temporary relief from Section 6655 penalties in connection with the application of CAMT).


Key takeaways

  • The Notice provides guidance on many of the fundamental components of CAMT, including:
    • Determining the taxpayer's Applicable Financial Statement (AFS).
    • Defining Financial Statement Income (FSI).
    • How Tax Consolidated Groups should determine their FSI and calculate the Group's CAMT liability.
    • Some adjustments to prevent the duplication or omission of income.
    • Applying the aggregation rules to determine Applicable Corporation status.
  • The Notice modifies some of the definitions, rules, and examples related to adjustments for depreciation in Notice 2023-7.
  • The CAMT FTC is available for the taxable year in which the foreign income taxes are paid or accrued by the Applicable Corporation (or the CFC for which it is a US shareholder), and the CAMT FTC and FTC Limitation is determined on an aggregate basis for all CFCs.
  • The Notice explicitly rejects comments submitted on Notice 2023-7 in a few instances, instead providing that:
    • Domestic corporations that are members of a Foreign Parented Multinational Group (FPMG) may not use any reasonable method to determine its adjusted financial statement income (AFSI), and instead must modify the FPMG's AFS to determine the amounts attributable to the domestic corporation.
    • Timing differences do not result in the duplication or omission of income, even in cases where those timing differences straddle CAMT's effective date.
    • Financial Statement NOLs (FSNOLs) will be applied against AFSI and depleted, even in years before CAMT applies.
  • Proposed regulations are expected to be released that will include the rules described in the Notice. While the proposed regulations are expected to apply to taxable years beginning on or after January 1, 2024, taxpayers may rely on the guidance in the Notice for taxable years ending on or before the date the proposed regulations are published in the Federal Register.

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