Alternative Minimum Tax
Like individuals, affected companies pay the AMT if it exceeds the liability computed under the regular tax method.
Fortunately, the AMT was repealed for corporations with annual average gross receipts of less than $7.5 million for their 3 preceding tax years, 5 million if only one prior tax year, or if it's only existed for one year regardless of gross receipts. The exemption continues in effect in subsequent years as long as the corporation has no more than $7.5 million in average gross receipts for the previous 3 years. Once a corporation loses its exemption, it's then liable for the AMT in the current and all future years. If you're concerned about being subject to AMT, call us. We can show you how to either avoid AMT or reduce its negative effect.
Smaller corporations that are exempt from the AMT must be diligent. The exemption will be permanently lost if their 3-year average of gross receipts increases to more than $7.5 million.