when does the alt min tax hit with an c corp; is there a linkto calculate it
State/Country relating to question: Texas
running the program on turbo tax
Hi and welcome to Just Answer!
Very similar to individuals - corporations might be subject to an AMT (alternative minimum tax if they have benefits from some tax preference items.
Form 4626 is used to calculate AMT for corporations
See fro reference IRS publication 542 - www.irs.gov/pub/irs-pdf/p542.pdf
The tax laws give special treatment to some types of income and allow special deductions and credits for some types of expenses. These laws enable some corporations with substantial economic income to significantly reduce their regular tax. The corporate alternative minimum tax (AMT) targets these corporations and attempts to ensure that they pay at least a minimum amount of tax on their economic income. A corporation (other than a small corporation exempt from the AMT, as discussed below) owes AMT if its tentative minimum tax is more than its regular tax.
The tentative minimum tax of a small corporation is zero. This means that a small corporation will not owe AMT.
Small corporation exemption. A corporation is treated as a small corporation exempt from the AMT for its current Tax Year if that year is the corporation's first tax year in existence (regardless of its gross receipts for the year) or:
-- It was treated as a small corporation exempt from the AMT for all prior tax years beginning after 1997, and
-- Its average annual gross receipts for the 3-tax-year period (or portion thereof during which the corporation was in existence) ending before its current tax year did not exceed $7.5 million ($5 million for the corporation's first 3-tax-year period).
Let me know if any help needed.
after reading the form 4652 instructions, it looks like the threshold is $ 40k before the alt min tax kicks in, right?
That is correct $40k is the threshold.
However - as I mentioned above - a small corporation will not owe AMT.
If your corporation's average annual gross receipts for the 3-tax-year period ending before its current tax year did not exceed $7.5 million ($5 million for the corporation's first 3-tax-year period) - there will not be AMT.
I don't have an S Corp but if I am reading your answer correctly, my C Corp would not have to pay AMT if the gross receipts for the have not been over $ 7.5 Million. If this is so, how do I go about making the adjustment to my 1120 for my C Corp?
S-corporation doesn't pay income taxes - it is a pass through entity - thus there is no AMT fro S-corporation.
Your understanding is correct - if your C-corporation's average annual gross receipts for the 3-tax-year did not exceed $7.5 million - it is classified as a small corporation and will not owe AMT.
If so - you do not need to make AMT adjustments on 1120.
ok, got it, so how do I remove the amt that is coming out on my corporations 1120. is there an adjustment that I need to make on the form 4626 or the 1120?
There is no selection on the form itself.There should be a selection if your corporation is classified as a small corporation.And that form should not be included.