How is the 2010 federal alternative minimum tax for an estate or trust recomputed to determine the Nebraska minimum tax on a 2010 fiduciary return?

Plain-English summary

This is a mechanical, year-specific worksheet ruling for 2010 estate and trust (fiduciary) returns. It is the fiduciary counterpart to Revenue Ruling 22-10-4 (individuals). It tells you how to translate the federal alternative minimum tax (and add-on minimum tax) for an estate or trust into the Nebraska minimum tax.

The problem it solves: Nebraska starts from federal figures but treats some items differently, so the fiduciary AMT can't be copied straight onto the Nebraska return -- it has to be recomputed using Nebraska's adjustments under Neb. Rev. Stat. § 77-2717. The adjustments under § 77-2716 include:

• Excluding interest or dividends from U.S. obligations (which Nebraska doesn't tax).
• Including interest or dividends from non-Nebraska state or local obligations.
• Excluding non-Nebraska income from an S corporation or LLC.

How it works in practice: you recompute Schedule I of the 2010 federal Form 1041 (the ruling lists the exact line-by-line changes -- see the original text below). Then you take line 56, Part III, of the recomputed federal Schedule I and enter it on line 1 of the Nebraska Minimum or Other Tax Worksheet; completing that worksheet gives the amount to enter on line 9 of the 2010 Form 1041N. You must attach the recomputed Schedule I to the return.

Context. The add-on minimum tax and the AMT are recomputed for all taxable years beginning after December 31, 1978. The ruling lists the equivalent prior-year rulings: 23-09-1 (2009), 23-08-1 (2008), and 23-07-1 (2007). Nebraska later eliminated its Alternative Minimum Tax, effective for tax years beginning on or after January 1, 2014 -- so this recomputation is historical, applying to the 2010 return and other still-open years, not to current filings.

What this means for you

2010 estate/trust (fiduciary) filers (and amended-return preparers for open years)

If the estate or trust had a federal AMT for 2010, you had to recompute Schedule I of Form 1041 for Nebraska under § 77-2717/§ 77-2716, run the result through the Nebraska Minimum or Other Tax Worksheet to get the line 9 amount on Form 1041N, and attach the recomputed Schedule I. Recompute every total/computational line but leave all other entries the same as the federal computation.

Current filers

You don't need this. Nebraska's AMT ended for tax years beginning on or after January 1, 2014. This ruling matters only for 2010 or other still-open earlier tax years.

Common questions

Q: How is the fiduciary version different from the individual one (22-10-4)?
A: It applies to estates and trusts filing Form 1041N, recomputes Schedule I of the federal Form 1041 rather than Form 6251, and uses the fiduciary adjustment statute Neb. Rev. Stat. § 77-2717.

Q: Where does the recomputed amount end up on the Nebraska return?
A: Line 56, Part III, of the recomputed federal Schedule I goes on line 1 of the Nebraska Minimum or Other Tax Worksheet; the worksheet result goes on line 9 of Form 1041N. Attach the recomputed Schedule I.

Q: What are the main Nebraska adjustments?
A: Exclude interest/dividends from U.S. obligations and non-Nebraska S corp/LLC income; include interest from non-Nebraska state or local obligations (Neb. Rev. Stat. § 77-2716).

Q: Does this still apply?
A: Only for tax year 2010 and other still-open earlier years. Nebraska eliminated its AMT for tax years beginning on or after January 1, 2014.

Citations and references

• Neb. Rev. Stat. § 77-2717 -- the adjustments used to recompute the federal fiduciary AMT/add-on minimum tax for Nebraska minimum tax purposes.
• Neb. Rev. Stat. § 77-2716 -- Nebraska adjustments (exclude U.S.-obligation interest/dividends and non-Nebraska S corp/LLC income; include non-Nebraska state/local obligation interest).
• Prior-year companions listed in the ruling: 23-09-1 (2009), 23-08-1 (2008), 23-07-1 (2007).

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/rr231001.pdf

Original ruling text

Revenue Ruling 23-10-1
Fiduciary Income Tax

February 22, 2011
COMPUTATION OF 2010 ALTERNATIVE MINIMUM TAX TO DETERMINE
NEBRASKA MINIMUM TAX FOR THE 2010 NEBRASKA RETURN
Issue:
How is the alternative minimum tax computed for a taxpayer’s 2010 U.S. Fiduciary Income Tax
Return, Federal Form 1041, Schedule I, to be recalculated in order to compute the Nebraska
income tax?
Conclusion:
Neb. Rev. Stat. § 77-2717 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.
Analysis:
Neb. Rev. Stat. § 77-2716 provides for the exclusion from taxable income of interest or
dividends from U.S. obligations as set forth in Fiduciary Income Tax Regulation 23-004.03A
and the inclusion of interest or dividends from non-Nebraska source state or local obligations.
Neb. Rev. Stat. § 77-2716 also provides for the exclusion from Nebraska taxable income of any
non-Nebraska income from an S corporation or limited liability company (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 2010
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.
2010 U.S. Income Tax Return for Estates and Trusts, Federal Form 1041, Schedule I:
Part I:
•

Line 1. Reduce the federal entry by the amounts on lines 3 and 6 of Nebraska Fiduciary
Income Tax Return, Form 1041N, and add the line 4 amount from Form 1041N.

•

Line 7. Enter the net operating loss deduction as adjusted for Nebraska purposes.

•

Line 8. Enter the tax-exempt interest only from Nebraska private activity bonds issued
after August 7, 1986.

•

Line 24. Enter the alternative tax net operating loss deduction as adjusted for
Nebraska purposes.

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

Revenue Ruling 23-10-1

February 22, 2011

Page 2 of 2

Part II:
•

Line 31. Enter the tax-exempt interest from Nebraska bonds (other than amounts included
on line 8).

Part III:
•

Line 52. If Part IV of Schedule I, 2010 Federal Form 1041, was used to make the
line 52 entry, exclude any capital gains in the calculation that were excluded on line 6 of
Form 1041N.

•

Line 53. Enter -0-.

•

Line 55. 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 56 of
Schedule I, Federal Form 1041.
Enter line 56, Part III, of the recomputed Schedule I, 2010 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 9 of the 2010 Form 1041N.
The recomputed Schedule I, Federal Form 1041, must be attached to the 2010 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:
2009
2008
2007

23-09-1
23-08-1
23-07-1

APPROVED:

Douglas A. Ewald
Tax Commissioner
February 22, 2011