Alternative Minimum Tax (AMT)

Like individuals, affected corporations may be subject to the AMT* if their AMT liability exceeds the liability computed under the regular tax method.

Corporations with average gross receipts of less than $5 million for their 3 preceding tax years are exempt from the AMT. The exemption continues in effect as long as the corporation has no more than $7.5 million in average gross receipts for the previous 3 years.

Once a corporation loses its exemption, it's then liable for the AMT in the current and all future years. If you're concerned about being subject to AMT, contact us. We can show you how to either avoid AMT or reduce its negative effect.

* The corporate AMT rate is 20%.

Smaller corporations that are exempt from the AMT should consider AMT effects if their income is hovering around $7 million. The exemption will be permanently lost if their
3-year average of gross receipts increases to more than $7.5 million.