Protecting Your Company from Alternative Minimum Tax
You have to file form 4626 Alternative Minimum Tax if your corporations tentative minimum tax is more than its regular tax. You have to file form 4626, according to the IRS, is if:
- The corporation's taxable income or (loss) before the net operating loss (NOL) deduction plus its adjustments and preferences total more than $40,000 or, if smaller, its allowable exemption amount, or
- The corporation claims any general business credit, the qualified electric vehicle credit, the non-conventional source fuel credit, or the credit for prior year minimum tax
Any corporation that is deemed "Small Corporation" doesnt get hit with the alternative minimum tax. For a corporation to qualify as a small corporation in the tax year 2000, that year needs to be its first year of operation plus:
- It was treated as a small corporation exempt from alternative minimum tax for prior tax years beginning after 1997.
- Its average annual gross receipts for the 3-tax-year period ending before its tax year beginning in 2000 did not exceed $7.5 million ($5 million if the corporation had only 1 prior tax year).
The only escape that exists out of the alternative minimum tax is if you are a small corporation. Other than that you have to file form 4626 and pay the taxes.