26%, on Alternative Minimum Taxable Income (AMTI) up to
28% on AMTI over the above amounts.
AMT Exemption Amounts
Taxpayers Filing Single or Head of Household:
Married Filing Jointly or Qualifying Widower:
Married Filing Separately:
The AMT exemption is reduced by 25% of the amount that alternative minimum taxable income exceeds the threshold amounts listed below.
Single or Head of Household
Married Filing Jointly or Qualifying Widowers
Married Filing Separately
AMT Net Operating Loss Deduction (ATNOLD)
Just as a taxpayer can take a net operating loss deduction (NOLD) in calculating regular income tax liability, under Code Sec. 56(a)(4), a taxpayer can take an alternative tax net operating loss deduction (ATNOLD) in calculating their alternative minimum taxable income (AMTI).
NOTE: As described below, an alternative minimum tax net operating loss (ATNOL) is not the same thing as an ATNOLD. Be careful to keep these separate concepts straight.
An ATNOL is the AMT version of the NOL. Under Code Sec. 172(c), an NOL is the excess of a taxpayer’s deductions over the taxpayer’s gross income. This excess is calculated with the modifications in Code Sec. 172(d).
Similarly, a taxpayer’s ATNOL is the excess of a taxpayer’s deductions allowed in determining alternative minimum taxable income (AMTI) over the income that is included in the taxpayer’s AMTI, calculated with the modifications in Code Sec. 172(d). In calculating the Code Sec. 172(d) modifications for ATNOL purposes, the Code Sec. 56(d)(2) AMT adjustments and preferences are taken into account.
EXAMPLE: In calculating an ATNOL for a year, the limitation of nonbusiness deductions to the amount of nonbusiness income must be calculated separately, using only nonbusiness income and deductions that are included in AMTI.
NOTE: An AMT preference is only taken into account to the extent the preference increased the amount of the taxpayer’s NOL for the taxable year.
A taxpayer’s ATNOLD for a taxable year is the total of its ATNOL carrybacks and ATNOL carryovers (see below) to that year, limited to:
2. the lesser of—
NOTE: Part (2) above allows a taxpayer to use ATNOLs for which he or she made an election to use the extended carryback period and qualified GO Zone, qualified recovery assistance, and qualified disaster recovery assistance losses to offset 100% of AMTI instead of 90% of AMTI.
If a taxpayer did not elect an extended carryback period for any NOLs or have any carrybacks or carryforwards of qualified GO Zone, qualified recovery assistance, and qualified disaster recovery assistance losses, his or her ATNOLD is simply limited to 90 percent of alternative minimum taxable income determined without regard to the ATNOLD and the Pre-
Carryback and Carryforward of ATNOLS
ATNOLS, like regular tax NOLs, are carried back and carried forward to other tax years according to the rules Code Sec. 172(b). The carryback and carryforward rules for NOLs and ATNOLs were changed for taxable years ending in 2018 and later years by the Tax Cut and Jobs Act and then changed again in 2020 by the CARES Act.
Tax years before 2018: Under Sec. 172(b), prior to amendment by the Tax Cuts and Jobs Act, an ATNOL in these tax years generally must be carried back to each of the 2 tax years preceding the loss year (unless an election to forego the carryback period is made, see below) and carried forward to each of the 20 tax years following the loss year.
Tax years 2018 through 2020: Under Sec. 172(b)(1)(D), as amended by the CARES Act, an ATNOL in these tax years generally must be carried back to each of the 5 tax years preceding the year of loss (unless an election to forego the carryback period is made, see below) and can be carried forward forward indefinitely after the loss year.
2021 and later tax years: Under Sec. 172(b), an ATNOL in one of these tax years generally cannot be carried back to any prior tax years, but can be carried forward indefinitely after the loss year.
Special rule for 2008 and 2009 ATNOLs: For 2008 and 2009, a taxpayer could elect an extended carryback period (3-
Election to forgo carryback period: For years before 2021, a taxpayer can elect to forgo the carryback period for his or her NOLs and ATNOLs. An election to forego the carryback period cannot be made separately for NOLs and ATNOLs (i.e., a taxpayer must treat NOLs and ATNOLs the same for carryback purposes).
Amount of ATNOL Carried Back or Forward to a Year
For years before 2021, the entire amount of the ATNOL for any taxable year must be carried back to the earliest of the taxable years to which the loss may be carried (unless an election is made to forgo the carryback period). For years 2021 and after, and years before 2018 in which the taxpayer makes the election to forego the carryback period for the ATNOL, the ATNOL is carried forward to the next taxable year. The portion of the ATNOL that is carried back or forward to each of the years after the first carryback or carry forward year is the excess, if any, of:
As noted above, the amount of the ATNOLD taken in a taxable year is generally limited to 90% of AMTI for the year.
NOTE: An ATNOL carried back or forward to a year for which taxpayer is not subject to the AMT is still considered to be used to reduce AMTI for that year. Therefore, in calculating the ATNOL carryforward to subsequent years, the taxpayer must take into account the allowable ATNOLD for that year.
EXAMPLE: Arthur had an ATNOL of $100,000 in 2019. He elects to forego the 5-
ATNOL carry forward from 2019 is considered used in 2020 and cannot be carried forward to future years.
Order of Use of ATNOLs
The ATNOLD deductions for the earlier years is computed with the modifications specified in Code Sec. 172(b)(2), taking into account the ATNOLD limitation described above. One of these modifications is that the ATNOLD for a prior taxable year does not include the loss year ATNOL or ATNOLs from any years after the loss year. Accordingly, in general, ATNOLs are absorbed in chronological order, i.e., ATNOLs from earlier years are absorbed before ATNOLs from later years.
CAUTION: As discussed above, ATNOLs for which the extended carryback period election was made can be used to offset 100% of AMTI instead of 90% of AMTI. This rule led some practitioners to claim that with respect to ATNOLs for which the extended carryback period had been made, the order of use rules had been changed. Under this argument, an ATNOL for which the election had been made must be used after all other ATNOLs, regardless of the years in which those other ATNOLs arose. Applying this modified order of use will provide a more favorable result for the taxpayer.
The IRS strongly disagrees with this argument, and has stated in guidance that the chronological order of use rule applies to all ATNOLS, including those from 2008 or 2009 for which the extended carryback period election was made
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