Corporate Alternative Minimum Tax Applicable After 2022; Technical Correction

DEPARTMENT OF THE TREASURY <SUBAGY>Internal Revenue Service</SUBAGY> <CFR>26 CFR Part 1</CFR> <DEPDOC>[REG-112129-23]</DEPDOC> <RIN>RIN 1545-BQ84</RIN> <SUBJECT>Corporate Alternative Minimum Tax Applicable After 2022; Technical Correction</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Internal Revenue Service (IRS), Treasury. <HD SOURCE="HED">ACTION:</HD> Notice of proposed rulemaking; technical correction. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This document contains technical corrections to a notice of proposed rulemaking (REG-112129-23), which was published in the <E T="04">Federal Register</E> on Friday, September 13, 2024. REG-112129-23 contains proposed regulations that relate to the application of the corporate alternative minimum tax, which is imposed on the adjusted financial statement income of certain corporations for applicable taxable years beginning after 2022. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Written or electronic comments are still being accepted and must be received by Thursday, January 16, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Commenters are strongly encouraged to submit public comments electronically via the Federal eRulemaking Portal at <E T="03">https://www.regulations.gov</E> (indicate IRS and REG-112129-23) by following the online instructions for submitting comments. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The Department of the Treasury (Treasury Department) and the IRS will publish for public availability any comments submitted to the IRS's public docket. Send paper submissions to: CC:PA:01:PR (REG-112129-23), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Concerning general corrections (including corrections to proposed §§ 1.56A-1 and 1.59-2), Madeline Padner at (202) 317-7006, and concerning corrections to proposed §§ 1.56A-15 and 1.56A-16, C. Dylan Durham at (202) 317-7005, each of the Office of Associate Chief Counsel (Income Tax and Accounting); concerning corrections to proposed §§ 1.56A-5 and 1.56A-20, Elizabeth Zanet or Brian Barrett, each of the Office of Associate Chief Counsel (Passthroughs and Special Industries) at (202) 317-6850; concerning corrections to proposed §§ 1.56A-18, 1.56A-19, 1.56A-21, 1.56A-23(e) and (f), and 1.1502-56A, Jeremy Aron-Dine or William W. Burhop, each of the Office of Associate Chief Counsel (Corporate) at (202) 317-3181; concerning corrections to proposed § 1.56A-26, Michelle L. Ng at (202) 317-6939, and concerning § 1.59-4, John J. Lee at (202) 317-6934, each of the Office of Associate Chief Counsel (International); and concerning submissions of comments or the public hearing, the Publications and Regulations Section, (202) 317-6901 (not toll-free numbers) or by email at <E T="03">publichearings@irs.gov</E> (preferred). </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> The notice of proposed rulemaking (REG-112129-23) that is the subject of these corrections is under sections 55, 56A, 59, and 1502 of the Internal Revenue Code. <HD SOURCE="HD1">Need for Correction</HD> As published, the notice of proposed rulemaking (REG-112129-23) contains errors that need to be corrected. The Treasury Department and the IRS intended that CAMT basis be used in amortizing or depreciating property not subject to the rules in proposed § 1.56A-15 (AFSI adjustments for section 168 property) and proposed § 1.56A-16 (AFSI adjustments for qualified wireless spectrum property). Therefore, the Treasury Department and IRS correct proposed § 1.56A-1(d)(4) to clarify that to the extent the CAMT basis of an asset is different than its AFS basis, and if income and expense (as well as gain or loss) is recognized for AFSI purposes under the section 56A regulations, then such income or expense (as well as gain or loss) reflected in FSI is redetermined for AFSI purposes by reference to the CAMT basis of the asset. The Treasury Department and the IRS intended that the simplified method for determining applicable corporation status take into account the adjustments provided to tax-exempt entities in section 56A(c)(12) and proposed § 1.56A-14. Therefore, the Treasury Department and IRS correct proposed § 1.59-2(g)(2) to take into account the adjustments provided to tax-exempt entities by proposed § 1.56A-14. The Treasury Department and the IRS intended proposed § 1.56A-19(g)(4)(iii) and (g)(5)(iii) to prevent a section 351 transferee that is an applicable corporation from (i) causing a section 351 exchange to be treated as a covered recognition transaction by issuing a de minimis amount of boot to a section 351 transferor that is not an applicable corporation, and thereby (ii) determining the section 351 transferee's CAMT basis in the assets received to be its AFS basis (that is, taking a fair value basis in the assets). Therefore, the Treasury Department and IRS correct proposed § 1.56A-19(g)(4)(iii) and (g)(5)(iii) to clarify that, if the amount of boot issued by the section 351 transferee to a section 351 transferor that is not an applicable corporation is less than ten percent of the fair market value of the assets transferred to the section 351 transferee by that section 351 transferor, the section 351 transferee determines its CAMT basis in the transferred assets under section 362 (that is, the CAMT basis of the assets in the hands of the section 351 transferor), increased by the regular tax gain recognized by the section 351 transferor. Proposed § 1.56A-19(g)(6)(iv) ( <E T="03">Example 4</E> ) is revised to reflect the corrections to proposed § 1.56A-19(g)(5)(iii). This document also contains corrections for other errors contained in the notice of proposed rulemaking (REG-112129-23) that need to be corrected. <HD SOURCE="HD1">Correction of Publication</HD> Accordingly, FR Doc. 2024-20089 (REG-112129-23), appearing on page 75062 in the <E T="04">Federal Register</E> on Friday, September 13, 2024, is corrected as follows: 1. On page 75063, in the third column, in the first partial paragraph, in the fifth line down from the top of the paragraph, the language “56(c)(3)(A)” is corrected to read “56A(c)(3)(A)”. 2. On page 75065, in the first column, in the second full paragraph, in the fifth line up from the bottom of the paragraph, the language “AFSI Tests” is corrected to read “AFSI tests”. 3. On page 75066, in the second column, in the first paragraph, in the third line down from the top of the paragraph, the language “2024-3 I.R.B.” is corrected to read “2024-3 I.R.B. 406”. 4. On page 75074, in the second column, in the first partial paragraph, in the tenth line up from the bottom of the paragraph, the language “388(g)” is corrected to read “338(g)”. 5. On page 75075, in the first column, in the thirteenth line up from the bottom of the page, the language “asset acquisition” is corrected to read “asset transaction”. 6. On page 75080, in the first column, the third line down from the top of the page is corrected to read “distributive share amount that is disallowed”. 7. On page 75086, in the third column, in the first full paragraph, the eighth line up from the bottom of the paragraph is corrected to read, “ending after December 31, 2019,”. 8. On page 75088, in the third column, in the first partial paragraph, the ninth line down from the top of the paragraph is corrected to read “in method of accounting for depreciation or a tax”. 9. On page 75088, in the third column, in the first full paragraph, in the ninth line up from the bottom of the paragraph, the language, “§ 1.56A-(d)(1)(iii)” is corrected to read, “§ 1.56A-15(d)(1)(iii)”. 10. On page 75089, in the third column, in the first full paragraph, the language, “§ 1.56A-15(e)(7)” is corrected to read, “§ 1.56A-15(e)(8)”. 11. On page 75090, in the second column, in the first full paragraph, the second line up from the bottom of the paragraph is corrected to read “ending on or before December 31,”. 12. On page 75090, in the second column, in the second full paragraph, the second line up from the bottom of the paragraph is corrected to read “ending on or before December 31,”. 13. On page 75091, in the second column, in the first full paragraph, the eighth line up from the bottom of the paragraph is corrected to read “taxable years ending on or before”. 14. On page 75101, in the first column, in the first partial paragraph: i. The ninth and eighth lines up from the bottom of the paragraph are corrected to read, “causing the deferred sale gain or loss to be accelerated into AFSI in”. ii. The fifth line up from the bottom of the paragraph is corrected to read “sum of (A) the deferred sale gain or loss that”. 15. On page 75101, in the third column, in the first partial paragraph, the last line of the paragraph is corrected to read “in which the distribution occurs unless the special rule in proposed § 1.56A-20(d)(1)(ii)(E) would apply to the timing of the inclusion.”. 16. On page 75103, in the third column, in the first partial paragraph, the seventh and sixth lines up from the bottom of the paragraph are corrected to read “which an acceleration or partial acceleration event described in § 1.721(c)-4(b) or § 1.721(c)-5(d), respectively, occurred; and (D) the”. 17. On page 75105, in the second column, in the first partial and first full paragraphs, the language “Section 168 Property”, is corrected to read “section 168 property”, everywhere it appears. 18. On page 75113, in the first column, the heading “3. Corporation in Existence for Less Than Three Taxable Years” is corrected to read “3. Corporation in Existence for Less Than Three Taxable Years and Short Taxable Years”. 19. On page 75120, in the first column, in the second partial paragraph, in the twelfth line up from ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 48k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━