COMPUTATION OF 2008 ALTERNATIVE MINIMUM TAX TO DETERMINE
NEBRASKA MINIMUM TAX FOR THE 2008 NEBRASKA RETURN
How is the alternative minimum tax computed for a taxpayer’s 2008 U.S. Individual Income Tax Return, Federal Form 1040 or 1040A, to be recalculated in order to compute the Nebraska alternative minimum tax?
Neb. Rev. Stat. § 77-2715 provides that the federal alternative minimum tax is to be recomputed by substituting Nebraska taxable income for federal taxable income and adjusting the Nebraska alternative minimum tax calculations for any items which are reflected differently in the determination of federal taxable income for Nebraska purposes. This applies to any federal schedules or other forms, the results of which are used in calculating the federal alternative minimum tax.
Among the adjustments provided by Neb. Rev. Stat. § 77-2716 are the exclusion from federal adjusted gross income of interest or dividends from U.S. obligations as set forth in Individual Income Tax Reg-22-002.05A and the inclusion of interest or dividends from non-Nebraska source state or local obligations. Section 77-2716 also provides for the exclusion from Nebraska taxable income of any non-Nebraska income from an S corporation or LLC. Therefore, any associated preference item derived from the S corporation or LLC included in the alternative minimum tax calculations should be excluded to the same extent in the Nebraska computation.
The specific line entries and the required adjustments in recomputing the minimum tax for the 2008 Nebraska Individual Income Tax Return, Form 1040N, are provided below. Recalculate all total or computational lines to reflect adjustments made pursuant to this ruling. All other entries must be the same as for the federal minimum tax computation.
2008 Federal Form 6251:
Line 1. If you itemized deductions, enter the amount from line 14, Nebraska Form 1040N and go to line 2, Form 6251.
Otherwise, enter line 5, plus line 12 minus line 13 from Nebraska Form 1040N, and skip to line 8, Form 6251.
Line 3. Enter line 9 from Federal Schedule A, minus line 8, Form 1040N.
Line 8. Enter -0-.
Line 11. Enter any Nebraska net operating loss deduction included on line 59, Schedule I, Form 1040N.
Line 12. Enter only the tax-exempt interest from Nebraska private activity bonds issued after August 7, 1986.
Line 28. Enter the alternative tax net operating loss deduction as adjusted for Nebraska purposes.
Line 32. If Part III of Form 6251 was used to make the line 32 entry, exclude any capital gains in the calculation that were excluded on line 54 of Nebraska Schedule I.
Line 33. Enter -0-.
Line 35. Compute the regular federal income tax before credits on the Nebraska Tax Table Income, line 14, Form 1040N. The same federal tax method used to complete line 44, Federal Form 1040, is to be used. Enter the computed amount without subtracting any foreign tax credit.
2008 Federal Form 1040A, Alternative Minimum Tax Worksheet:
Line 1. Add the amount from line 22, Form 1040A, and the amount from line 12, Form 1040N. Subtract the amount entered on line 13, Form 1040N. Enter the result on line 1.
Line 22. If lines 11 through 21 were used to make the line 22 entry, exclude any capital gains in the calculation that were excluded on line 54 of Nebraska Schedule I.
Line 23. Compute the regular federal income tax before credits on the Nebraska Tax Table Income, line 14, Form 1040N. The same federal tax method used to complete line 28, Federal Form 1040A, is to be used.
Line 36 of the recomputed Federal Form 6251 or line 24 of the recomputed Federal Form 1040A, Alternative Minimum Tax Worksheet, is to be entered on line 1 of the Nebraska Minimum or Other Tax Worksheet found on page 14 of the instructions for Form 1040N. The worksheet is to be completed to determine the amount to enter on line 16 of the Form 1040N, or, for taxpayers filing Nebraska Schedule III, the amount to enter on line 75 of the Nebraska Schedule III.
A copy of the recomputed Federal Form 6251, or Federal Form 1040A, Alternative Minimum Tax Worksheet, must be attached to the Nebraska Individual Income Tax Return, Form 1040N, when filed.
The alternative minimum tax is to be recomputed for all taxable years beginning after December 31, 1978. Other rulings involving recomputation of Federal Form 6251, or the Federal Form 1040A, Alternative Minimum Tax Worksheet, are shown for the preceding three years:
Douglas A. Ewald
January 22, 2009