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! Multiply that amount by the alternative minimum tax
rate;
! Subtract available foreign tax credits.
Result: a taxpayer’s tentative minimum tax. Then
! Calculate the regular tax liability;
! Add back in nonrefundable credits (other than foreign
tax credits and personal nonrefundable credits);
! Compare the resulting adjusted regular income tax to
the tentative minimum tax;
! If the tentative minimum tax is greater than the
adjusted regular income tax, then add the difference to
the amount of tax due for the year;
! If the adjusted regular income tax is greater than the
tentative minimum tax, then limit the amount of
business tax credits to the difference and allow any
leftover credit to be carried back one year or forward
to later years.
As if this weren’t complicated enough, there is also
something called the “minimum tax credit,” which, despite its
name, is not a credit against a taxpayer’s alternative minimum
tax but against his regular income tax. The minimum tax credit
is essentially the unused portion of certain deductions, such as
depreciation, as calculated under the alternative minimum tax,
plus certain other unused credits as defined in the Code. See
sec. 53(b), (d)(1). Like the business tax credits above, the
minimum tax credit can be used only to the extent that the
adjusted regular income tax is greater than the tentative minimum
tax. Sec. 53(c). Any unused portion of the minimum tax credit
is carried forward to future tax years until it is used up. See
sec. 53(b).
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Last modified: May 25, 2011