How is the 2011 federal credit for prior year minimum tax recomputed to determine the Nebraska minimum tax credit on a 2011 individual income tax return?

Plain-English summary

This is a mechanical, year-specific worksheet ruling for 2011 individual returns. It's the companion to Revenue Ruling 22-11-1 (which recomputes the 2011 AMT): this one recomputes the credit for prior year minimum tax.

What the credit is: if you paid AMT in an earlier year on "deferral" items, federal law lets you claim some of it back in a later year as a minimum tax credit (federal Form 8801). Because Nebraska treats certain items differently, you can't use the federal credit as-is -- you have to recompute it for Nebraska.

How it works in practice: using the adjustments required by Neb. Rev. Stat. § 77-2715(2), you redo specific lines of your 2011 Federal Form 8801 (the ruling lists the exact line-by-line changes -- see the original text below), drawing on the Nebraska-recomputed 2010 forms and the 2011 AMT recomputation from Revenue Ruling 22-11-1. Then you multiply the recomputed Form 8801 line 25 by 29.6% (.2960) and enter that result:

• Full-year residents: in the Form 8801 area on line 20 of Form 1040N.
• Partial-year residents and nonresidents: on line 70 of Nebraska Schedule III, labeled "AMT Credit."

The Nebraska minimum tax credit is nonrefundable (it can reduce tax to zero but is not paid out as a refund), and a copy of the recomputed Form 8801 must be attached to the return.

Context. This ruling is part of the annual AMT/minimum-tax-credit series (the prior-year individual companions are 22-10-3/22-10-4). Nebraska later eliminated its individual Alternative Minimum Tax, effective for tax years beginning on or after January 1, 2014, so this recomputation is historical -- it applies to the 2011 return and other still-open years, not to current filings.

What this means for you

2011 individual filers claiming the prior-year minimum tax credit (and amended-return preparers for open years)

If you claimed a federal credit for prior year minimum tax for 2011, you had to recompute it for Nebraska under § 77-2715(2), take 29.6% of the recomputed Form 8801 line 25, and report it on Form 1040N (line 20) or Nebraska Schedule III (line 70). Attach the recomputed Form 8801. The credit is nonrefundable.

Current filers

You don't need this. Nebraska's individual AMT -- and this related credit -- ended for tax years beginning on or after January 1, 2014. This ruling matters only for 2011 or other still-open earlier tax years.

Common questions

Q: What's the difference between this ruling and 22-11-1?
A: 22-11-1 recomputes the 2011 alternative minimum tax itself; this ruling (22-11-2) recomputes the credit for prior year minimum tax, which builds on that AMT recomputation.

Q: What is the 29.6% factor?
A: After recomputing the federal Form 8801 for Nebraska, you multiply line 25 by 29.6% (.2960) to arrive at the Nebraska minimum tax credit.

Q: Where does the credit go, and is it refundable?
A: Line 20 of Form 1040N for full-year residents, or line 70 of Nebraska Schedule III for part-year residents/nonresidents. It is a nonrefundable credit. Attach the recomputed Form 8801.

Q: Does this still apply?
A: Only for tax year 2011 and other still-open earlier years. Nebraska eliminated its individual AMT for tax years beginning on or after January 1, 2014.

Citations and references

• Neb. Rev. Stat. § 77-2715(2) -- the adjustments used to recompute the federal credit for prior year minimum tax for Nebraska purposes.
• Revenue Ruling 22-11-1 -- the companion 2011 individual AMT recomputation this credit calculation relies on.
• 29.6% (.2960) -- the factor applied to the recomputed Form 8801 line 25 to compute the Nebraska minimum tax credit.

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/rr221102.pdf

Original ruling text

Revenue Ruling 22-11-2
Individual Income Tax

January 23, 2012
COMPUTATION OF 2011 CREDIT FOR PRIOR YEAR MINIMUM TAX TO
DETERMINE NEBRASKA MINIMUM TAX CREDIT
FOR THE 2011 NEBRASKA RETURN
ISSUE.
How should the credit for prior year minimum tax computed for a taxpayer’s 2011 U.S. Individual
Income Tax Return, Federal Form 1040, be recalculated to compute the Nebraska tax credit?
CONCLUSION.
The federal credit for prior year minimum tax must be recomputed using the adjustments required
by Neb. Rev. Stat. § 77-2715(2). This allows for the computation of 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.
ANALYSIS.
The specific line entries and the required adjustments in recomputing the credit for prior year
minimum tax for the 2011 Nebraska Individual Income Tax Return, Form 1040N, are provided
below. Recalculate all total or computational lines to reflect adjustments made pursuant to
this ruling.
Use the amounts from the 2010 Federal Form 6251 (Alternative Minimum Tax - Individuals)
recomputed pursuant to Revenue Ruling 22-10-4 on all lines referencing the 2010
Federal Form 6251.
2011 Federal Form 8801 (Credit for Prior Year Minimum Tax - Individuals, Estates,
and Trusts):
Part I —
•

Line 3. Enter the minimum tax credit net operating loss deduction as adjusted for
Nebraska purposes.

•

Line 11. If Part III of Form 8801 was used to make the line 11 entry, exclude any capital
gains in the calculation that were entered on line 55 of Schedule I of the 2011 Nebraska
Form 1040N.

•

Line 12. Enter -0-.

Follow federal instructions to recompute the net minimum tax on exclusion items through line 15
of the 2011 Federal Form 8801.

Nebraska Department of Revenue, PO Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 22-11-2

January 23, 2012

Page 2 of 2

Part II —
•

Line 19. Enter the line 28 amount from the 2010 Federal Form 8801 recomputed pursuant to
Revenue Ruling 22-10-3.

•

Line 20. Enter -0-.

•

Line 22. Enter the recomputed 2011 regular federal income tax before credits, which was entered
on line 34 of the recomputed Federal Form 6251.

•

Line 23. Enter the line 33 amount of the 2011 Federal Form 6251 recomputed pursuant to
Revenue Ruling 22-11-1.

Multiply the amount on line 25 of the recomputed 2011 Federal Form 8801 by 29.6% (.2960).
Enter this result on the Nebraska Individual Income Tax Return, Form 1040N, as follows:
(a) Full-year residents must enter the result in the Form 8801 area on line 20;
(b) Partial-year residents and nonresidents must enter the result on line 70, Nebraska Schedule III,
and write in the phrase, “AMT Credit.”
The Nebraska Minimum Tax Credit is a nonrefundable credit.
The recomputed Federal Form 8801 must be attached to the 2011 Nebraska Individual Income Tax
Return, Form 1040N, when filed.
APPROVED:

Douglas A. Ewald
Tax Commissioner
January 23, 2012