§55. Alternative minimum tax imposed
(a) General rule
There is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the excess (if any) of-
(1) the tentative minimum tax for the taxable year, over
(2) the regular tax for the taxable year.
(b) Tentative minimum tax
For purposes of this part-
(1) Amount of tentative tax
(A) Noncorporate taxpayers
(i) In general
In the case of a taxpayer other than a corporation, the tentative minimum tax for the taxable year is the sum of-
(I) 26 percent of so much of the taxable excess as does not exceed $175,000, plus
(II) 28 percent of so much of the taxable excess as exceeds $175,000.
The amount determined under the preceding sentence shall be reduced by the alternative minimum tax foreign tax credit for the taxable year.
(ii) Taxable excess
For purposes of this subsection, the term "taxable excess" means so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.
(iii) Married individual filing separate return
In the case of a married individual filing a separate return, clause (i) shall be applied by substituting "$87,500" for "$175,000" each place it appears. For purposes of the preceding sentence, marital status shall be determined under section 7703.
(B) Corporations
In the case of a corporation, the tentative minimum tax for the taxable year is-
(i) 20 percent of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount, reduced by
(ii) the alternative minimum tax foreign tax credit for the taxable year.
(2) Alternative minimum taxable income
The term "alternative minimum taxable income" means the taxable income of the taxpayer for the taxable year-
(A) determined with the adjustments provided in section 56 and section 58, and
(B) increased by the amount of the items of tax preference described in section 57.
If a taxpayer is subject to the regular tax, such taxpayer shall be subject to the tax imposed by this section (and, if the regular tax is determined by reference to an amount other than taxable income, such amount shall be treated as the taxable income of such taxpayer for purposes of the preceding sentence).
(3) Maximum rate of tax on net capital gain of noncorporate taxpayers
The amount determined under the first sentence of paragraph (1)(A)(i) shall not exceed the sum of-
(A) the amount determined under such first sentence computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the lesser of-
(i) the net capital gain; or
(ii) the sum of-
(I) the adjusted net capital gain, plus
(II) the unrecaptured section 1250 gain, plus
(B) 10 percent of so much of the adjusted net capital gain (or, if less, taxable excess) as does not exceed the amount on which a tax is determined under section 1(h)(1)(B), plus
(C) 20 percent of the adjusted net capital gain (or, if less, taxable excess) in excess of the amount on which tax is determined under subparagraph (B), plus
(D) 25 percent of the amount of taxable excess in excess of the sum of the amounts on which tax is determined under the preceding subparagraphs of this paragraph.
In the case of taxable years beginning after December 31, 2000, rules similar to the rules of section 1(h)(2) shall apply for purposes of subparagraphs (B) and (C). Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h) but computed with the adjustments under this part.
(c) Regular tax
(1) In general
For purposes of this section, the term "regular tax" means the regular tax liability for the taxable year (as defined in section 26(b)) reduced by the foreign tax credit allowable under section 27(a), the section 936 credit allowable under section 27(b), and the Puerto Rico economic activity credit under section 30A. Such term shall not include any increase in tax under section 49(b) or 50(a) or subsection (j) or (k) of section 42.
(2) Cross references
For provisions providing that certain credits are not allowable against the tax imposed by this section, see sections 26(a), 29(b)(6), 30(b)(3), and 38(c).
(d) Exemption amount
For purposes of this section-
(1) Exemption amount for taxpayers other than corporations
In the case of a taxpayer other than a corporation, the term "exemption amount" means-
(A) $45,000 in the case of-
(i) a joint return, or
(ii) a surviving spouse,
(B) $33,750 in the case of an individual who-
(i) is not a married individual, and
(ii) is not a surviving spouse, and
(C) $22,500 in the case of-
(i) a married individual who files a separate return, or
(ii) an estate or trust.
For purposes of this paragraph, the term "surviving spouse" has the meaning given to such term by section 2(a), and marital status shall be determined under section 7703.
(2) Corporations
In the case of a corporation, the term "exemption amount" means $40,000.
(3) Phase-out of exemption amount
The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount equal to 25 percent of the amount by which the alternative minimum taxable income of the taxpayer exceeds-
(A) $150,000 in the case of a taxpayer described in paragraph (1)(A) or (2),
(B) $112,500 in the case of a taxpayer described in paragraph (1)(B), and
(C) $75,000 in the case of a taxpayer described in paragraph (1)(C).
In the case of a taxpayer described in paragraph (1)(C)(i), alternative minimum taxable income shall be increased by the lesser of (i) 25 percent of the excess of alternative minimum taxable income (determined without regard to this sentence) over $165,000 or (ii) $22,500.
(e) Exemption for small corporations
(1) In general
(A) $7,500,000 gross receipts test
The tentative minimum tax of a corporation shall be zero for any taxable year if the corporation's average annual gross receipts for all 3-taxable-year periods ending before such taxable year does not exceed $7,500,000. For purposes of the preceding sentence, only taxable years beginning after December 31, 1993, shall be taken into account.
(B) $5,000,000 gross receipts test for first 3-year period
Subparagraph (A) shall be applied by substituting "$5,000,000" for "$7,500,000" for the first 3-taxable-year period (or portion thereof) of the corporation which is taken into account under subparagraph (A).
(C) First taxable year corporation in existence
If such taxable year is the first taxable year that such corporation is in existence, the tentative minimum tax of such corporation for such year shall be zero.
(D) Special rules
For purposes of this paragraph, the rules of paragraphs (2) and (3) of section 448(c) shall apply.
(2) Prospective application of minimum tax if small corporation ceases to be small
In the case of a corporation whose tentative minimum tax is zero for any prior taxable year by reason of paragraph (1), the application of this part for taxable years beginning with the first taxable year such corporation ceases to be described in paragraph (1) shall be determined with the following modifications:
(A) Section 56(a)(1) (relating to depreciation) and section 56(a)(5) (relating to pollution control facilities) shall apply only to property placed in service on or after the change date.
(B) Section 56(a)(2) (relating to mining exploration and development costs) shall apply only to costs paid or incurred on or after the change date.
(C) Section 56(a)(3) (relating to treatment of long-term contracts) shall apply only to contracts entered into on or after the change date.
(D) Section 56(a)(4) (relating to alternative net operating loss deduction) shall apply in the same manner as if, in section 56(d)(2), the change date were substituted for "January 1, 1987" and the day before the change date were substituted for "December 31, 1986" each place it appears.
(E) Section 56(g)(2)(B) (relating to limitation on allowance of negative adjustments based on adjusted current earnings) shall apply only to prior taxable years beginning on or after the change date.
(F) Section 56(g)(4)(A) (relating to adjustment for depreciation to adjusted current earnings) shall not apply.
(G) Subparagraphs (D) and (F) of section 56(g)(4) (relating to other earnings and profits adjustments and depletion) shall apply in the same manner as if the day before the change date were substituted for "December 31, 1989" each place it appears therein.
(3) Exception
The modifications in paragraph (2) shall not apply to-
(A) any item acquired by the corporation in a transaction to which section 381 applies, and
(B) any property the basis of which in the hands of the corporation is determined by reference to the basis of the property in the hands of the transferor,
if such item or property was subject to any provision referred to in paragraph (2) while held by the transferor.
(4) Change date
For purposes of paragraph (2), the change date is the first day of the first taxable year for which the taxpayer ceases to be described in paragraph (1).
(5) Limitation on use of credit for prior year minimum tax liability
In the case of a taxpayer whose tentative minimum tax for any taxable year is zero by reason of paragraph (1), section 53(c) shall be applied for such year by reducing the amount otherwise taken into account under section 53(c)(1) by 25 percent of so much of such amount as exceeds $25,000. Rules similar to the rules of section 38(c)(3)(B) shall apply for purposes of the preceding sentence.
(Added and amended
Prior Provisions
A prior section 55,
Amendments
1998-Subsec. (b)(3).
"(A) the amount determined under such first sentence computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the lesser of-
"(i) the net capital gain, or
"(ii) the sum of-
"(I) the adjusted net capital gain, plus
"(II) the unrecaptured section 1250 gain, plus
"(B) 25 percent of the lesser of-
"(i) the unrecaptured section 1250 gain, or
"(ii) the amount of taxable excess in excess of the sum of-
"(I) the adjusted net capital gain, plus
"(II) the amount on which a tax is determined under subparagraph (A), plus
"(C) 10 percent of so much of the taxpayer's adjusted net capital gain (or, if less, taxable excess) as does not exceed the amount on which a tax is determined under section 1(h)(1)(D), plus
"(D) 20 percent of the taxpayer's adjusted net capital gain (or, if less, taxable excess) in excess of the amount on which tax is determined under subparagraph (C).
In the case of taxable years beginning after December 31, 2000, rules similar to the rules of section 1(h)(2) shall apply for purposes of subparagraphs (C) and (D). Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h)."
Subsec. (e)(1).
"(A) such corporation met the $5,000,000 gross receipts test of section 448(c) for its first taxable year beginning after December 31, 1996, and
"(B) such corporation would meet such test for the taxable year and all prior taxable years beginning after such first taxable year if such test were applied by substituting '$7,500,000' for '$5,000,000'."
1997-Subsec. (b)(1)(A)(ii).
Subsec. (b)(3).
Subsec. (c)(1).
Subsec. (e).
1996-Subsec. (c)(1).
Subsec. (c)(2).
1993-Subsec. (b)(1).
"(A) 20 percent (24 percent in the case of a taxpayer other than a corporation) of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount, reduced by
"(B) the alternative minimum tax foreign tax credit for the taxable year."
Subsec. (d)(1).
Subsec. (d)(3).
1992-Subsec. (c)(1).
Subsec. (c)(2).
1990-Subsec. (b)(1)(A).
Subsec. (c)(1).
1988-Subsec. (b)(2).
Subsec. (c)(1).
Subsec. (d)(3).
1986-Subsec. (c)(1).
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by section 311(b)(1), (2)(A) of
Section 401(b) of
Amendment by section 1601(f)(1)(C) of
Effective Date of 1996 Amendment
Amendment by section 1205(d)(6) of
Amendment by section 1401(b)(3) of
Amendment by section 1601(b)(2)(A) of
Effective Date of 1993 Amendment
Section 13203(d) of
Effective Date of 1992 Amendments
Amendment by
Amendment by
Effective Date of 1990 Amendment
Section 11102(b) of
Amendment by section 11813(b)(5) of
Effective Date of 1988 Amendment
Amendment by section 1002(l)(27) of
Section 1007(a)(3) of
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section 701(f) of
"(1)
"(2)
"(A)
"(B)
"(3)
"(4)
"(5)
"(A)
"(i) 50 percent of the excess of taxable income for the 5-taxable year period ending with the taxable year preceding the 1st taxable year to which such section applies over the adjusted net book income for such period, over
"(ii) the aggregate amounts taken into account under this paragraph for preceding taxable years.
"(B)
"(C)
"(6)
"(A) In the case of investment tax credits described in subparagraph (B) or (C), subsection 38(c)(3)(A)(ii) of the Internal Revenue Code of 1986 shall be applied by substituting '25 percent' for '75 percent', and section 38(c)(3)(B) of the Internal Revenue Code of 1986 shall be applied by substituting '75 percent' for '25 percent'.
"(B) If, on September 25, 1985, a regulated electric utility owned an undivided interest, within the range of 1,111 and 1,149, in the 'maximum dependable capacity, net, megawatts electric' of an electric generating unit located in Illinois or Mississippi for which a binding written contract was in effect on December 31, 1980, then any investment tax credit with respect to such unit shall be described in this subparagraph. The aggregate amount of investment tax credits with respect to the unit in Mississippi allowed solely by reason of being described in this subparagraph shall not exceed $141,000,000.
"(C) If, on September 25, 1985, a regulated electric utility owned an undivided interest, within the range of 1,104 and 1,111, in the 'maximum dependable capacity, net, megawatts electric' of an electric generating unit located in Louisiana for which a binding written contract was in effect on December 31, 1980, then any investment tax credit of such electric utility shall be described in this subparagraph. The aggregate amount of investment tax credits allowed solely by reason of being described by this subparagraph shall not exceed $20,000,000.
"(7)
"(A) For purposes of part VI of subchapter A of chapter 1 of the Internal Revenue Code of 1986, in the case of a qualified taxpayer, alternative minimum taxable income for the taxable year shall be reduced by an amount equal to the agreement vessel depreciation adjustment.
"(B) For purposes of this paragraph, the agreement vessel depreciation adjustment shall be an amount equal to the depreciation deduction that would have been allowable for such year under section 167 of such Code with respect to agreement vessels placed in service before January 1, 1987, if the basis of such vessels had not been reduced under section 607 of the Merchant Marine Act of 1936 [46 App. U.S.C. 1177], as amended, and if depreciation with respect to such vessel had been computed using the 25-year straight-line method. The aggregate amount by which basis of a qualified taxpayer is treated as not reduced by reason of this subparagraph shall not exceed $100,000,000.
"(C) For purposes of this paragraph, the term 'qualified taxpayer' means a parent corporation incorporated in the State of Delaware on December 1, 1972, and engaged in water transportation, and includes any other corporation which is a member of the affiliated group of which the parent corporation is the common parent. No taxpayer shall be treated as a qualified corporation for any taxable year beginning after December 31, 1991."
Savings Provision
For provisions that nothing in amendment by section 11813(b)(5) of
Transitional Provisions
Section 1007(f)(1) of
Plan Amendments Not Required Until January 1, 1998
For provisions directing that if any amendments made by subtitle D [§§1401–1465] of title I of
Plan Amendments Not Required Until January 1, 1994
For provisions directing that if any amendments made by subtitle B [§§521–523] of title V of
Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For applicability of amendment by section 701(a) of
High Income Taxpayer Report
Section 2123 of
[Section 441(b)(2) of
Section Referred to in Other Sections
This section is referred to in sections 2, 5, 11, 12, 24, 26, 32, 38, 45A, 53, 59, 59A, 168, 443, 641, 666, 815, 847, 860E, 860J, 871, 877, 882, 897, 962, 1260, 1397E, 1561, 6015, 6425, 6655, 6662 of this title.