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  • Corporate AMT, tax-exempt organizations, and Form 4626

    From Adam H. Kerman@21:1/5 to All on Wed Oct 30 17:52:15 2024
    Here's a weird one.

    As we recall, the Inflation Reduction Act of 2022 created a 15% AMT
    on adjusted financial statement income of corporations over $1 billion.

    The unrelated businesses of tax-exempt organizations are also subject to
    AMT over $1 billion.

    In a proposed regulation Corporate Alternative Minimum Tax Applicable
    After 2022 https://www.federalregister.gov/documents/2024/09/13/2024-20089/corporate-alternative-minimum-tax-applicable-after-2022
    Treasury provided a simplified method of whether AMT is applicable to a
    given corporate taxpayer but the method didn't take into account how it
    would apply to unrelated businesses of tax-exempt entities.

    Because of this, tax-exempt organizations are exempted from filing Form
    4626 Corporate AMT for 2023.

    Nevertheless, they remain subject to AMT. The tax computation on the
    form must still be made even though the form isn't filed.

    I don't see how the taxpayer would defend a position. Given the size of
    entity, this would be subject to agency review. Once the final
    regulation is in place, I assume it'll be retroactive to 2023 any and
    the orgnization must file anyway.

    The organizations I work with aren't that large.

    --
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  • From John Levine@21:1/5 to All on Wed Oct 30 23:01:18 2024
    According to Adam H. Kerman <[email protected]>:
    Because of this, tax-exempt organizations are exempted from filing Form
    4626 Corporate AMT for 2023.

    Nevertheless, they remain subject to AMT. The tax computation on the
    form must still be made even though the form isn't filed.

    If you owe UBIT, you have to file form 990-T and pay the tax. In
    the instructions for form 990-T on page 1 under What's New it says:

    Alternative minimum tax. The Inflation Reduction Act of 2022 (IRA
    2022) amended section 55 to impose a new corporate alternative minimum
    tax (CAMT) based on the adjusted financial statement income (AFSI) of
    an applicable corporation. See Form 4626, Alternative Minimum
    Tax-Corporations, and its Instructions, for more information.

    And on page 11 under Tax Computation it says:

    Alternative Minimum Tax

    Line 5. Organizations liable for tax on unrelated business taxable
    income may be liable for alternative minimum tax. Trusts attach
    Schedule I, Alternative Minimum Tax–Estate and Trusts, and enter any
    tax from Schedule I on this line. Corporations may need to complete
    and attach Form 4626, Alterative Minimum Tax–Corporation, and enter
    any tax from Form 4626 on this line. See the Instructions for Form
    4626 for more information.

    So no matter what that Federal Register page says, if you owe AMT it'd
    be pretty dumb to file a 990-T and not include the 4626.

    By the way, what kind of charity has a billion dollars of UBI? Maybe
    Columbia University which owns a lot of NYC real estate such as the
    land under Rockefeller Center.
    --
    Regards,
    John Levine, [email protected], Primary Perpetrator of "The Internet for Dummies",
    Please consider the environment before reading this e-mail. https://jl.ly

    --
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    << The foregoing was not intended or written to be used, >>
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    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
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  • From Adam H. Kerman@21:1/5 to John Levine on Thu Oct 31 10:47:53 2024
    John Levine <[email protected]> wrote:
    According to Adam H. Kerman <[email protected]>:

    Because of this, tax-exempt organizations are exempted from filing Form >>4626 Corporate AMT for 2023.

    Nevertheless, they remain subject to AMT. The tax computation on the
    form must still be made even though the form isn't filed.

    If you owe UBIT, you have to file form 990-T and pay the tax. In
    the instructions for form 990-T on page 1 under What's New it says:

    Alternative minimum tax. The Inflation Reduction Act of 2022 (IRA
    2022) amended section 55 to impose a new corporate alternative minimum
    tax (CAMT) based on the adjusted financial statement income (AFSI) of
    an applicable corporation. See Form 4626, Alternative Minimum Tax-Corporations, and its Instructions, for more information.

    And on page 11 under Tax Computation it says:

    Alternative Minimum Tax

    Line 5. Organizations liable for tax on unrelated business taxable
    income may be liable for alternative minimum tax. Trusts attach
    Schedule I, Alternative Minimum Tax–Estate and Trusts, and enter any
    tax from Schedule I on this line. Corporations may need to complete
    and attach Form 4626, Alterative Minimum Tax–Corporation, and enter
    any tax from Form 4626 on this line. See the Instructions for Form
    4626 for more information.

    So no matter what that Federal Register page says, if you owe AMT it'd
    be pretty dumb to file a 990-T and not include the 4626.

    By the way, what kind of charity has a billion dollars of UBI? Maybe >Columbia University which owns a lot of NYC real estate such as the
    land under Rockefeller Center.

    Treasury doesn't need to have a specific charity in mind. The whole point
    of a tax-exempt organization being subject to UBIT on UBTI (and now AMT)
    is to try to avoid a tax shelter from being set up.

    Tax-exempt organizations include more than just charities. For
    individuals, retirement funds are tax-exempt organizations which might hold investments that create UBTI. If you recall, a few months back, someone
    asked a question about a self-directed retirement fund and may have been required to file the 990-T himself.

    The largest pension plans hold enormous pools of monies and can
    certainlu have UBTI.

    I think the point is to prevent a tax attorney from advising a client to
    hold a major income-producing entity under a tax-exempt organization
    as a tax avoidance scheme.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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