The IRS today, in Notice 2025-46 and Notice 2025-49, announced its intent to partially withdraw and revise proposed regulations on applying the corporate alternative minimum tax (CAMT).

Notice 2025-46 provides interim guidance on applying the CAMT to domestic corporate transactions, financially troubled companies and consolidated groups. Notice 2025-49 provides additional interim guidance on computing adjusted financial statement income (AFSI), including new AFSI adjustments not otherwise available under the existing proposed regulations. Notice 2025-49 also modifies the rules for relying on the existing proposed regulations and announces the IRS's intent to defer the proposed applicability date of the forthcoming regulations.

Notice 2025-46

Consistent with the interim guidance in Notice 2025-46, the forthcoming proposed regulations are anticipated to:

• Align Proposed Treas. Reg. Sections 1.56A-18 and 1.56A-19 closer to the rules that apply for regular tax purposes when determining the AFSI consequences of stock ownership in a domestic corporation and transactions undertaken by domestic corporations
• Clarify in Proposed Treas. Reg. Sections 1.56A-21 the circumstances in which regular tax rules, as opposed to financial accounting standards, apply for determining the CAMT consequences for troubled companies with income from the discharge of indebtedness
• Align Proposed Treas. Reg. Sections 1.56A-21 more closely with IRC Section 108(e)(6) and (8)
• Clarify the attribute-reduction rules applicable to the basis of foreign corporation stock
• Revise Proposed Treas. Reg. Section 1.1502-56A to allow consolidated groups to determine AFSI in a manner that more closely aligns with the consolidated return regulations that apply for regular tax purposes
• Revise Proposed Treas. Reg. Section 1.56A-23 to no longer require taxpayers to apply the limitations in Proposed Treas. Reg. Section 1.56A-23(e) and (f) when determining financial statement net operating losses (FSNOLs) available to reduce AFSI

Taxpayers may rely on the interim guidance in Notice 2025-46 for tax years preceding the date the forthcoming proposed regulations are published in the Federal Register. Relying on the interim guidance in the notice will not cause a corporation to become subject to, or violate, the reliance rules in the preamble of the existing proposed regulations.

Notice 2025-49

Consistent with the interim guidance in Notice 2025-49, the forthcoming proposed regulations are anticipated to:

• Allow regulated utilities within the scope of Accounting Standards Codification (ASC) 980 to reduce AFSI by amounts paid to repair and maintain eligible regulatory assets that are capitalized for financial reporting purposes
• Modify Proposed Treas. Reg. Section 1.56A-24 to provide an election to disregard certain unrealized gains and losses (in addition to unrealized gains and losses on AFSI hedges and hedged items) that are included in financial statement income but generally are not included in gross income for regular tax purposes
• Allow certain AFSI adjustments for entities subject to the tonnage tax regime under Subchapter R
• Allow an AFSI adjustment for IRC Section 168 depreciation that is embedded in a pre-2020 regular tax NOL
• Allow taxpayers to make certain adjustments to AFSI for nonlife insurance company NOL carrybacks
• Allow a reduction in AFSI for IRC Section 197 amortization of goodwill that was acquired in a transaction that was announced to the public on or before October 28, 2021, or closed and completed on or before October 28, 2021, if not announced to the public
• Modify Proposed Treas. Reg. Section 1.56A-17(c)(2) and (d)(1) to provide a simplified approach for determining the AFSI adjustment that results from an accounting principle change or restatement

Taxpayers may generally rely on the interim guidance in Notice 2025-49 for tax years beginning before the date the forthcoming proposed regulations are published in the Federal Register; the reliance rules for the different provisions in Notice 2025-49 vary, however, with some being eligible for prospective reliance only (e.g., 2024 tax years and later).

Notice 2025-49 also modifies the reliance rules in the preamble to the existing proposed regulations to permit taxpayers to rely on the proposed regulations on a section-by-section basis until final regulations are published in the Federal Register. Certain exceptions apply, and taxpayers must consistently apply the chosen section in its entirety. Special reliance rules apply to certain sections of the existing proposed regulations.

Finally, Notice 2025-49 clarifies that taxpayers may rely on the interim guidance in Notice 2025-27, Notice 2025-28 and Notice 2025-46 without having to rely on any section (or portion thereof) of the existing proposed regulations (except to the extent a section, or portion thereof, is incorporated as part of that interim guidance).

A detailed Tax Alert on Notices 2025-46 and 2025-49 is forthcoming.