On August 16, 2022 President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law.
The IRA includes a 15% corporate alternative minimum tax, a 1% excise tax on stock buybacks and a two-year extension of the excess business loss limitation rules. The IRA also contains a number of energy tax provisions.
I. Main Tax Provisions
The IRA imposes a 15% corporate alternative minimum tax based on the financial statement income of corporations or their predecessors with a three-year taxable year average annual adjusted financial statement income in excess of $1 billion. The corporate alternative minimum tax is effective for tax years beginning after December 31, 2022.
The 15% corporate alternative minimum tax is equal to the difference between a corporation’s “adjusted financial statement income” for the taxable year and the corporation’s “alternative minimum tax foreign tax credit” for the taxable year. A corporation’s tax liability is the greater of its regular tax liability and the 15% alternative minimum tax.
A corporation’s annual adjusted financial statement income is based on its book income, with certain adjustments, such as to account for a corporation’s activities undertaken indirectly through a consolidated group, a partnership, or a disregarded entity. The adjusted financial statement income is also adjusted for certain taxes, such as federal income and excess profits taxes, and accelerated depreciation.
The...
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