On Jul 29, the IRS released Notice 2025-28 that offers "interim guidance to reduce the compliance burdens and costs associated with applying the corporate alternative minimum tax (CAMT) to partnerships and CAMT entity partners," the tax agency said.
In the same notice, the Treasury Department and IRS also said they plan to partially withdraw the CAMT proposed
regulations that were released back in September 2024 while intending to issue revised proposed regulations, partly to include some similar to the interim rules in Notice 2025-28.
According to KPMG, the notice generally allows a CAMT entity—other than a partnership—to choose to determine its amount of adjusted financial statement income (AFSI) from a partnership investment utilizing a couple of new, simplified methods: a “Top-Down Election” and, in certain instances, a “Taxable Income Election.”
Most taxpayers will welcome being able to utilize one or both of these simplified methods—given that less information sharing might be required in certain circumstances and that the utilization of these simplified methods might result in a smaller inclusion. But, taxpayers should know that both elections could still likely require certain complex calculations.
KPMG explained that the notice also offers certain generally favorable rules about contributions to, and distributions from, a partnership. These rules offer options on how to compute the AFSI inclusion from contributions to, and distributions from, a partnership.
An option is a modification of the method previously proposed in the CAMT proposed regulations issued in September 2024, and the other is the “full Subchapter K method.” While favorable to taxpayers for the most part, these rules are complicated and involve binding elections. This is why taxpayers who engage in partnership joint ventures, specifically M&A deals, will need to closely study these rules. The notice also lets taxpayers disregard certain financial statement income amounts that result from transactions that are non-realization events for regular tax purposes.
Notice 2025-28 offers that taxpayers might depend on the interim guidance provided in sections 3 through 7 of the notice until revised proposed regulations (or other guidance) are issued, and section 8 of the notice favorably modifies the reliance rules offered in the CAMT proposed regulations.
This is why, for instance, for partnership contributions and distributions in tax years ending on or prior to the issuance of the CAMT proposed regulations in September 2024, taxpayers might depend on the guidance in Notice 2025-28, the guidance in Notice 2023-7, or the CAMT proposed regulations, KPMG noted.
A taxpayer’s reliance on any of the guidance in sections 3 through 7 of Notice 2025-28 for a tax year will not result in the taxpayer being subject to, or violating, the reliance rules (including the consistency requirements) in the proposed preamble in the CAMT proposed regulations for such tax year.