Corporate Minimum Tax Credit Modifications

By Josh Lapierre April 1, 2020

A favorable change in the CARES Act involves the corporate minimum tax credit. The 2017 Tax Cuts and Jobs Act repealed the alternative minimum tax for corporations for tax years after 2017, but allowed any carryover of minimum tax credit to be utilized in 2018 through 2021. The credit utilized would be limited to 50% of the excess of the minimum tax in 2018 through 2020 and the remaining minimum tax credit would be refundable in the corporation’s 2021 tax year. The CARES Act accelerates the benefit and allows corporations to claim the fully refundable credit in 2019, or allows a corporation to elect to claim the refundable credit amount for 2018. To claim the credit for 2018 a corporation may amend the 2018 return or file an application for a tentative refund (commonly referred to a quickie refund) to claim the credit for its 2018 tax year. The quickie refund application is typically faster than filing an amended return but must be filed by December 31, 2020. A corporation that wishes to claim the credit on its 2019 return but has already filed its return may file a superseded return, rather than file an amended return, to claim the credit. A superseded return would need to be filed before the original (or extended) due date of the 2019 return. Based on the language in the bill if the carryover minimum tax credit credit is not claimed on the 2018 or the 2019 return it will be lost.

Corporations with minimum tax credits should review which year to utilize the benefit while considering the interaction with other rules and limitations. That includes 2020 projections, because if a net operating loss is generated in 2020, the potential for carryback will impact the usage of the credit.

For more information, please contact your BNN tax advisor at 800.244.7444.

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