Does the alternative minimum tax on your 2004 federal individual return have to be recomputed to figure the Nebraska minimum tax, and which Form 1040N lines change?

Plain-English summary

If you owed federal alternative minimum tax (AMT) on your 2004 return, Nebraska imposes its own Nebraska minimum tax — but you can't just carry the federal number across. This ruling is the year-specific worksheet for 2004 individuals, telling you how to recompute the federal AMT under Nebraska rules. (The companion prior-year-credit ruling for 2004 is Revenue Ruling 22-04-3.)

Why recompute. Under Neb. Rev. Stat. § 77-2715, the additional taxes (including AMT) are recomputed by substituting Nebraska taxable income for federal taxable income and adjusting for items reflected differently for Nebraska. The § 77-2716 adjustments include:

• excluding interest or dividends from U.S. obligations (per Individual Income Tax Reg-22-002.05A);
• including interest or dividends from non-Nebraska state or local obligations; and
• excluding any non-Nebraska income from an S-corporation or LLC — and, correspondingly, excluding any related AMT preference item to the same extent.

The 2004 line-by-line substitutions. Recalculate all total/computational lines; keep every other line the same as the federal AMT computation. On the 2004 Federal Form 6251, the ruling gives specific entries for lines 1, 3, 6, 7, 10, 11, 17, 27, 31, 32, and 34 — for example:

• Line 10 — enter any Nebraska net operating loss deduction (from line 52, Schedule I, Form 1040N);
• Line 11 — enter only tax-exempt interest from Nebraska private activity bonds issued after August 7, 1986;
• Line 17 — make no state adjustment for special bonus depreciation reflected in the federal calculation;
• Line 34 — recompute the regular federal income tax before credits on Nebraska Tax Table Income (line 14, Form 1040N), without subtracting any foreign tax credit.

Parallel entries are given for filers using the Federal Form 1040A Alternative Minimum Tax Worksheet (lines 1, 21, 22).

Where the result goes. Take line 35 of the recomputed Form 6251 (or line 23 of the recomputed 1040A worksheet) to the Nebraska Minimum or Other Tax Worksheet on page 8 of the Form 1040N instructions. Complete it to get the amount for line 16 of Form 1040N — or, for filers using Nebraska Schedule III, line 68 of that schedule. Attach the recomputed federal form to your Form 1040N.

The AMT is recomputed for all tax years beginning after December 31, 1978. For the three preceding years the Department issued Revenue Rulings 22-03-1 (2003), 22-02-2 (2002), and 22-01-1 (2001).

What this means for you

2004 Nebraska individual filers with federal AMT

Don't copy your federal AMT onto the Nebraska return. Rebuild Form 6251 (or the 1040A worksheet) using Nebraska income and the adjustments above — pulling out U.S.-obligation and non-Nebraska S-corp/LLC items, ignoring federal bonus depreciation for state purposes — then run the result through the page-8 worksheet to reach line 16 (or Schedule III line 68). Attach the recomputed form.

Filers looking at a different tax year

This ruling is specific to 2004, and the form line numbers shift year to year. For 2003, 2002, and 2001 use Revenue Rulings 22-03-1, 22-02-2, and 22-01-1, respectively.

Common questions

Q: Do I have to recompute AMT for Nebraska, or can I use the federal number?
A: You must recompute. Federal Form 6251 (or the 1040A AMT worksheet) is recalculated for Nebraska to determine the Nebraska minimum tax.

Q: Does Nebraska follow federal bonus depreciation in the AMT calculation?
A: No. On line 17, make no state adjustment for any special bonus depreciation reflected in the federal calculations.

Q: Where does the recomputed amount end up on my return?
A: Line 35 of Form 6251 (or line 23 of the 1040A worksheet) feeds the Nebraska Minimum or Other Tax Worksheet on page 8 of the 1040N instructions; the result goes to line 16 of Form 1040N, or line 68 of Nebraska Schedule III.

Citations and references

• Neb. Rev. Stat. § 77-2715 — additional taxes (including AMT) recomputed by substituting Nebraska taxable income for federal taxable income.
• Neb. Rev. Stat. § 77-2716 — Nebraska adjustments (U.S.-obligation interest excluded; non-Nebraska state/local obligation interest included; non-Nebraska S-corp/LLC income excluded).
• Individual Income Tax Reg-22-002.05A — exclusion from federal AGI of interest or dividends from U.S. obligations.
• Prior-year companions — 2003: Revenue Ruling 22-03-1; 2002: 22-02-2; 2001: 22-01-1.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr220402.pdf

Original ruling text

REVENUE RULING 22-04-2
December 17, 2004
Individual Income Tax-Computation of 2004 Alternative Minimum Tax to Determine Nebraska
Minimum Tax for the 2004 Nebraska Return. ALTERNATIVE MINIMUM TAX--INDIVIDUALS,
FEDERAL FORM 6251, AND THE ALTERNATIVE MINIMUM TAX WORKSHEET, FEDERAL
FORM 1040A, ARE TO BE RECALCULATED FOR NEBRASKA INDIVIDUAL INCOME TAX
PURPOSES TO DETERMINE THE NEBRASKA MINIMUM TAX.
Advice has been requested as to whether the alternative minimum tax computed for a taxpayer’s 2004
U.S. Individual Income Tax Return, Federal Forms 1040 or 1040A, must be recalculated in order to
compute the Nebraska income tax.
Nebraska law imposes a tax on the federal alternative minimum tax recomputed to take into account
the adjustments required by the Nebraska Revenue Act of 1967, as amended. Section 77-2715 of
the Nebraska Revised Statutes provides that the additional taxes shall 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 section 77-2716 of the Nebraska Revised Statutes 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 2004
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.
2004 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 7, Form 6251.
Line 3. Enter line 9 from Federal Schedule A, minus line 8, Form 1040N.
Line 6. Enter the limitation amount on the disallowed itemized deductions, if any, from line 11 of
the Nebraska Itemized Deduction Worksheet on page 12 of the Form 1040N instructions.
Line 7. Enter zero.
Line 10. Enter any Nebraska net operating loss deduction included on line 52, Schedule I, Form
1040N.
Line 11. Enter only the tax-exempt interest from Nebraska private activity bonds issued after
August 7, 1986.
Line 17. Do not make any adjustment for state purposes for any special bonus depreciation reflected
in any federal calculations.

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 22-04-2

December 17, 2004

Page 2 of 2

Line 27. Enter the alternative tax net operating loss deduction as adjusted for Nebraska purposes.
Line 31. If Part III of Form 6251 was used to make the line 31 entry, exclude any capital gains in
the calculation that were excluded on Line 50 of Nebraska Schedule I.
Line 32. Enter zero.
Line 34. 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 43, Federal Form 1040,
is to be used. Enter the computed amount without subtracting any foreign tax credit.
2004 Federal Form 1040A, Alternative Minimum Tax Worksheet:
Line 1. Add the amount from line 22, Form 1040A, the amount from line 12, Form 1040N. Subtract
the amount entered on line 13, Form 1040N. Enter the result on line 1.
Line 21. If Lines 8 through 20 were used to make the line 21 entry, exclude any capital gains in the
calculation that were excluded on Line 50 of Nebraska Schedule I.
Line 22. 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 35 of the recomputed Federal Form 6251 or line 23 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 8 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 68 of the Nebraska Schedule III.
A copy of the recomputed Federal Form 6251 or Federal Form 1040A 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:
Tax Year

Revenue Ruling
Reference

2003

22-03-1

2002

22-02-2

2001

22-01-1

APPROVED:

Mary Jane Egr
State Tax Commissioner

December 17, 2004