How does a Nebraska estate or trust recompute the 1997 federal credit for prior year minimum tax to claim the Nebraska credit?

Plain-English summary

When an estate or trust pays alternative minimum tax in one year, the federal system later lets it take some of that back as a credit for prior year minimum tax (Federal Form 8801). Nebraska allows a matching credit — but it has to be recomputed on Nebraska terms. This ruling gives fiduciaries the method for the 1997 return.

The rule. Under Neb. Rev. Stat. §77-2717, the federal credit for prior year minimum tax is recomputed using the Nebraska adjustments, applying the AMT adjustments set out in Revenue Ruling 23-97-1. Recalculate every total or computational line to reflect those adjustments.

Carry-in figures from earlier recomputations. In completing the 1997 Form 8801, use the 1996 Form 1041, Schedule H, and Form 8801 recomputed under Revenue Rulings 23-96-1 and 23-96-2. For line 19, use the 1996 Form 8801 recomputed under Revenue Ruling 23-96-2; line 22 is line 38 of the recomputed 1997 Schedule I, Form 1041; and line 23 is the line 37 amount of the 1997 Schedule I recomputed under Revenue Ruling 23-97-1.

Turning it into the Nebraska credit. Multiply line 25 of the recomputed 1997 Federal Form 8801 by 29.6% (.2960). Enter that result on Form 1041N as follows:

• Resident estates and trusts — on line 14, writing in "AMT Credit."
• Nonresident estates or trusts — on line 27, Nebraska Schedule I, writing in "AMT credit."

The Nebraska Minimum Tax Credit is nonrefundable, and the recomputed Form 8801 must be attached to the 1997 Form 1041N.

What this means for you

An estate or trust claiming a prior-year minimum tax credit for 1997

Don't copy the federal credit. Recompute Form 8801 with Nebraska figures (drawing on the recomputed 1996 and 1997 forms), take 29.6% of recomputed line 25, and claim it on Form 1041N line 14 (resident estates and trusts) or Nebraska Schedule I line 27 (nonresidents), attaching the recomputed Form 8801.

A fiduciary or preparer coordinating the AMT rulings

This credit ruling leans on companion rulings — 23-96-1 and 23-96-2 (the recomputed 1996 forms) and 23-97-1 (the recomputed 1997 Schedule I). Have those recomputations in hand before you start.

Common questions

Q: Can the estate or trust use the federal prior-year minimum tax credit directly on the Nebraska return?
A: No. Section 77-2717 requires recomputing Form 8801 with Nebraska adjustments first.

Q: How is the Nebraska credit calculated?
A: Multiply line 25 of the recomputed 1997 Federal Form 8801 by 29.6% (.2960).

Q: Where does it go, and is it refundable?
A: Resident estates and trusts use Form 1041N line 14; nonresidents use Nebraska Schedule I line 27. The credit is nonrefundable, and you must attach the recomputed Form 8801.

Citations and references

• Neb. Rev. Stat. §77-2717 — requires recomputing the federal prior-year minimum tax credit with Nebraska adjustments for fiduciaries.
• Revenue Rulings 23-96-1 and 23-96-2 — the recomputed 1996 Schedule H / Schedule I and Form 8801 figures carried into the 1997 computation.
• Revenue Ruling 23-97-1 — the recomputed 1997 Schedule I (AMT adjustments) used for lines 22 and 23.
• Federal Form 8801; Form 1041N line 14; Nebraska Schedule I line 27 — the forms and destination lines for the 1997 fiduciary 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/rr239702.pdf

Original ruling text

REVENUE RULING 23-97-2
December 17, 1997
Fiduciary Income Tax-Computation of 1997 Credit for Prior Year Minimum Tax. CREDIT FOR
PRIOR YEAR MINIMUM TAX, FEDERAL FORM 8801, IS TO BE RECALCULATED FOR
NEBRASKA FIDUCIARY INCOME TAX PURPOSES TO DETERMINE THE NEBRASKA
CREDIT FOR PRIOR YEAR MINIMUM TAX.
Advice has been requested as to whether the credit for prior year minimum tax computed on
Federal Form 8801 for a taxpayer’s 1997 U.S. Fiduciary Income Tax Return, Federal Form 1041,
must be recalculated in order to compute the Nebraska tax credit.
Section 77-2717 of the Nebraska Revised Statutes directs that the federal credit for prior year
minimum tax be recomputed using the adjustments required by the Nebraska Revenue Act of 1967,
as amended. Further, Nebraska Revenue Ruling 23-97-1 provides the adjustments for alternative
minimum tax computations for Nebraska determinations. This ruling is to be used for purposes of
calculating the Nebraska credit for prior year minimum tax.
The specific line entries and the required adjustments in recomputing the credit for prior year
minimum tax for the 1997 Nebraska Fiduciary Income Tax Return, Form 1041N, are provided
below. Recalculate all total or computational lines to reflect adjustments made pursuant to
this ruling.
In completing the 1997 Federal Form 8801, use the amounts from the 1996 Federal Form 1041,
Schedule H, and Federal Form 8801 recomputed for Nebraska pursuant to Revenue Rulings 2396-1 and 23-96-2.
1997 Federal Form 8801:
Part I:
Line 4: Use the federal instructions for calculating the amount to enter on line 4, and follow
Revenue Ruling 23-96-1 when completing any line 4p.(tax-exempt interest) or line 7 (alternative
net operating loss) entries on the 1996 Form 1041, Schedule I.
Line 12: Enter 0.
Follow federal instructions to recompute the net minimum tax on exclusion items through line 15
of the recomputed 1997 Federal Form 8801.
Part II:
Line 19: Enter the line 26 amount from the recomputed 1996 Federal Form 8801 pursuant to
Revenue Ruling 23-96-2.
Line 20: Enter 0.
Line 22: Enter line 38 from the recomputed 1997 Schedule I, Federal Form 1041.
Line 23: Enter the line 37 amount from the 1997 Federal Form 1041, Schedule I, as recomputed
pursuant to Revenue Ruling 23-97-1.

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

Revenue Ruling 23-97-2

December 17, 1997

Page 2 of 2

Multiply line 25 of the recomputed 1997 Federal Form 8801 by 29.6 per cent (.2960). This result
is to be entered on the Nebraska Fiduciary Income Tax Return, Form 1041N, as follows:
(a) Resident estates and trusts are to enter the result on line 14 and write in the phrase, “AMT
Credit”; and
(b) Nonresident estates or trusts are to enter the result on line 27, Nebraska Schedule I, 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 1997 Nebraska Fiduciary Income Tax
Return, Form 1041N, when filed.
APPROVED:

M. Berri Balka
State Tax Commissioner
December 17, 1997