Instructions For Schedule O (Form 1120) - 2012 (Page 6 of 9) in pdf

tax on taxable income over

Allocation of AMT Exemption

Step 3. The amount determined

$15,000,000, but not over

Amount and the Reduction of

under step 2 is divided by the total

$18,333,333.

tax-benefit amount, received by all the

the AMT Exemption Amount

component members of the group

In determining the AMT liability of a

Apportioning the additional taxes.

from using all the tax brackets to

corporation, the amount of AMTI to

The additional taxes imposed by

which any component member's

which the AMT rate is applied is

section 11(b)(1) must be apportioned

income was subject.

reduced by the $40,000 AMT

among the component members in

exemption amount. For a controlled

Step 4. The percentage calculated

the same manner as the applicable

group of corporations, the AMT

under step 3 is multiplied by the

tax bracket amount is apportioned.

exemption amount must be

amount of the group's additional

The component members are

apportioned among the component

taxes. The amount determined under

required to use the proportionate

members of the group. That amount

this step 4 equals the amount of the

method unless all component

must be divided equally among the

additional taxes apportioned to such

members affirmatively elect to adopt

component members for those tax

component member for that tax

the FIFO method by checking the box

years, which are subject to the same

bracket.

on line 7b. See the instructions for

December 31 testing date, except

line 7.

Step 5. If a component member is

where all those members have

liable for regular tax (not including the

The proportionate method.

adopted an apportionment plan

additional taxes imposed by section

Under the proportionate method, the

providing for an unequal

11(b)(1)) under more than one tax

additional taxes are allocated to each

apportionment of the AMT exemption

bracket, that member must calculate

component member to which a tax

amount. If so, the component

the amount of additional taxes with

bracket amount was apportioned, in

members of the group will apportion

respect to each tax bracket to be

the same proportion as the portion of

the AMT exemption amount according

apportioned to that member.

the tax-benefit from that tax bracket

to the terms of that apportionment

which was allocated bears to the total

Accordingly, steps 1 through 4

plan.

tax-benefit amount provided to all

must be applied for each tax bracket

The $40,000 AMT exemption

members from the use of that tax

applicable to that member. The sum

amount shall be reduced, but not

bracket. These tax-benefits are

of all the amounts of additional taxes

below zero, as the amount of AMTI

attributable to the tax savings that the

apportioned to a component member

increases. For a controlled group of

members of the group realized from

from each tax bracket, to which that

corporations, to compute the amount

having tax bracket amounts taxed at a

member is subject, is the total amount

of this reduction to the AMT

lower rate instead of the higher tax

of the additional taxes apportioned to

exemption amount, the AMTI of all

rates to which income of the group

that member.

component members must be

would otherwise be subject.

The FIFO method. Under a

combined in order to compute the

The steps for applying the

amount of that reduction. This

first-in-first-out (FIFO) method for

proportionate method are as follows:

exemption amount completely phases

allocating the additional taxes among

Step 1. The regular tax (not including

the component members of the

out when a controlled group's

the additional taxes imposed by

combined AMTI is at least $310,000.

controlled group, the first dollars of

section 11(b)(1)) owed by a

This reduction to the AMT exemption

additional taxes imposed by section

component member under a particular

11(b)(1) owed by the component

amount will effectively be allocated to

tax bracket is divided by the total tax

each of the component members to

members of a controlled group are to

owed by all component members

which the exemption amount was

be allocated proportionately to those

under that tax bracket.

members availing themselves of the

apportioned and will effectively be

apportioned to the component

lowest tax bracket (the first tax

The maximum amount of tax that a

members in the same manner as is

bracket), up to the amount of the

corporation owes under the 15% tax

tax-benefit received by those

the exemption amount.

bracket is $7,500. The maximum

members from having availed

amount of tax that a corporation owes

Only the positive AMTI of those

themselves of that tax-bracket

under the 25% tax bracket is $6,250.

component members of a controlled

amount. Any remaining amount of

The maximum amount of tax that a

group are combined for purposes of

unallocated additional taxes is then

corporation owes under the 34% tax

determining those members'

allocated proportionately among the

bracket is $3,374,500.

reduction of the AMT exemption

component members which avail

Step 2. The percentage calculated

amount.

themselves of the next higher tax

under step 1 is multiplied by the total

bracket, and so on, until the entire

Report the AMT exemption amount

tax-benefit amount received by all the

amount of the additional taxes has

and the phaseout of the exemption

members of the group from their use

been fully apportioned among the

amount in Part IV, columns (c) and

of this tax bracket. This computed

component members. For example,

(d), respectively.

amount equals the portion of the

the first $9,500 of additional tax

group's tax-benefit amount received

liability of a controlled group is

by a particular member from using its

apportioned entirely to the component

portion of this tax bracket.

members that availed themselves of

the benefit of the 15% tax bracket.

-6-

Instructions For Schedule O (Form 1120) - 2012 Page 6

Related Articles

Related forms

Related Categories