How does a Nebraska estate or trust recompute the 2000 federal alternative minimum tax to figure the Nebraska minimum tax?

Plain-English summary

Nebraska has its own minimum tax that builds on the federal alternative minimum tax (AMT) — but the federal AMT must be recomputed with Nebraska figures first. This ruling gives estates and trusts the line-by-line method for the 2000 return, working from Federal Form 1041, Schedule I.

The rule. Under Neb. Rev. Stat. §77-2717, the federal AMT is recomputed by substituting Nebraska taxable income for federal taxable income and adjusting for items treated differently for Nebraska, across Schedule I and any form feeding it.

The Nebraska adjustments (§77-2716). In redoing the computation you:

• exclude interest or dividends from U.S. obligations (Individual Income Tax Regulation 22-002.05A);
• include interest or dividends from non-Nebraska state or local obligations; and
• exclude any non-Nebraska S-corporation or LLC income, along with any preference item derived from that entity.

Recalculate every total or computation line to reflect these adjustments; all other entries match the federal computation. (For example, tax-exempt interest on line 4p is limited to Nebraska private activity bonds issued after August 7, 1986, and the regular tax on line 38 is computed on the recomputed Line 1 income without subtracting any foreign tax credit.)

Where the result goes. Enter line 39, Part III of the recomputed Schedule I on line 1 of the Nebraska Minimum or Other Tax Worksheet, then complete the worksheet to find the amount for line 10 of the 2000 Form 1041N. Attach the recomputed Schedule I to the return.

How far back. The add-on minimum tax and the alternative minimum tax must be recomputed for all taxable years beginning after December 31, 1978. The Department issues a parallel fiduciary ruling each year; the immediately preceding years are covered by Revenue Rulings 23-99-1 (1999), 23-98-1 (1998), and 23-97-1 (1997). This ruling is also the AMT recomputation that the companion credit ruling, Revenue Ruling 23-00-2, relies on for the 2000 fiduciary prior-year minimum tax credit.

What this means for you

An estate or trust that owed federal AMT in 2000

Recompute Form 1041 Schedule I with the Nebraska adjustments, run the Nebraska Minimum or Other Tax Worksheet, and report the result on line 10 of Form 1041N, attaching the recomputed Schedule I.

A fiduciary also claiming the prior-year minimum tax credit

You'll use this recomputed Schedule I again when you work Revenue Ruling 23-00-2 for the credit — keep it with your file.

Common questions

Q: Does the estate or trust owe Nebraska minimum tax just because it owed federal AMT?
A: You recompute the federal AMT with Nebraska adjustments; the recomputed figure drives the Nebraska minimum tax, which can differ from the federal amount.

Q: Which line carries the result to Form 1041N for 2000?
A: Line 39, Part III of the recomputed Schedule I → line 1 of the Nebraska Minimum or Other Tax Worksheet → line 10 of Form 1041N.

Q: How many years back does this apply?
A: The minimum tax is recomputed for all taxable years beginning after December 31, 1978.

Citations and references

• Neb. Rev. Stat. §77-2717 — recompute the federal AMT using Nebraska taxable income for fiduciaries.
• Neb. Rev. Stat. §77-2716 — the Nebraska adjustments (U.S.-obligation interest, non-Nebraska bond interest, non-Nebraska S-corp/LLC income and preference items).
• Individual Income Tax Regulation 22-002.05A — exclusion of U.S.-obligation interest or dividends.
• Form 1041 Schedule I; Form 1041N line 10; Revenue Ruling 23-00-2 — the forms, destination line, and companion credit ruling.

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/rr230001.pdf

Original ruling text

REVENUE RULING 23-00-1
December 29, 2000
Fiduciary Income Tax-Computation of 2000 Alternative Minimum Income Tax to Determine
Nebraska Minimum Tax for the 2000 Nebraska Return. ALTERNATIVE MINIMUM TAX-FIDUCIARIES, FEDERAL FORM 1041, SCHEDULE I, IS TO BE RECALCULATED FOR
NEBRASKA FIDUCIARY 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
2000 U.S. Fiduciary Income Tax Return, Federal Form 1041, Schedule I, 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 77-2717 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.
For instance, Section 77-2716 of the Nebraska Revised Statutes provides for the exclusion from
adjusted gross income of interest or dividends from U.S. obligations as set forth in Individual Income
Tax Regulation 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 2000
Nebraska Fiduciary Income Tax Return, Form 1041N, are provided below. Recalculate all total
or computation lines to reflect adjustments made pursuant to this ruling. All other entries
must be the same as for the federal minimum tax computation.
2000 Federal Form 1041, Schedule I:
Part I:
Line 1. Reduce the federal entry by the amounts on lines 3 and 7 of Form 1041N and add the
line 5 amount from Form 1041N.
Line 2. Enter the net operating loss deduction as adjusted for Nebraska purposes.
Line 4p. Enter the tax-exempt interest only from Nebraska private activity bonds issued after
August 7, 1986.
Line 7. Enter the alternative tax net operating loss deduction as adjusted for Nebraska
purposes.

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

Revenue Ruling 23-00-1

December 29, 2000

Page 2 of 2

Part II:
Line 14. Enter the tax-exempt interest from Nebraska bonds (other than amounts included on
line 4p).
Part III:
Line 35. If Part IV of Schedule I, 2000 Federal Form 1041, was used to make the line 35 entry,
exclude any capital gains in the calculation that were excluded on Line 7 of Form 1041N.
Line 36. Enter zero.
Line 38. Compute the regular federal income tax before credits on the Line 1 income as entered
above. The same federal tax method used to complete line 23, Federal Form 1041, is to be used.
Enter the computed amount without subtracting any foreign tax credit.
Follow federal instructions to recompute the alternative minimum tax through Part III, line 39 of
Schedule I, Federal Form 1041.
Enter line 39, Part III, of the recomputed Schedule I, 2000 Federal Form 1041, on line 1 of the
Nebraska Minimum or Other Tax Worksheet. Complete the worksheet to determine the amount to
enter on line 10 of the 2000 Form 1041N.
The recomputed Schedule I, Federal Form 1041, must be attached to the 2000 Nebraska Fiduciary
Income Tax Return, Form 1041N, when filed.
The add-on minimum tax and the alternative minimum tax are to be recomputed for all taxable years
beginning after December 31, 1978. The specific line entries on Federal Form 1041, Schedule I,
that are to be altered in the recomputation for Nebraska are provided for the following tax years:
Tax Year

Revenue Ruling
Reference

1999

23-99-1

1998

23-98-1

1997

23-97-1

APPROVED:

Mary Jane Egr
State Tax Commissioner
December 29, 2000