The recently enacted Inflation Reduction Act imposes a 15% corporate alternative minimum tax based on financial statement income (book minimum tax, or BMT), effective for tax years beginning after December 31, 2022. The BMT applies to corporations with average adjusted financial statement income over a three-tax year period in excess of $1 billion, but increases a taxpayer’s tax only to the extent that the tentative minimum tax exceeds regular tax plus base erosion and anti-abuse tax.
The legislation leaves a number of determinations to Treasury, both explicitly and implicitly. Potentially affected taxpayers should expect extensive regulations interpreting and supplementing these provisions, and should start preparing as soon as possible for the 2023 effective date.