How is the 2002 federal credit for prior year minimum tax (Form 8801) recomputed for an individual to figure the Nebraska credit, and where does it go on Form 1040N?

Plain-English summary

The federal tax code lets a taxpayer who paid alternative minimum tax (AMT) in an earlier year claim a credit for prior year minimum tax later, on Federal Form 8801. Nebraska allows its own version of that credit — but, like the AMT itself, it has to be recomputed under Nebraska rules. This ruling is the year-specific worksheet for 2002 individuals, and it is the credit companion to the 2002 individual AMT ruling, Revenue Ruling 22-02-2.

Why recompute. Under Neb. Rev. Stat. § 77-2715(2), the federal credit for prior year minimum tax is recomputed using the adjustments required by the Nebraska Revenue Act of 1967, as amended. Because the credit depends on the prior year's AMT, use the 2001 Federal Form 6251 as already recomputed for Nebraska under Revenue Ruling 22-01-1 on all lines referencing the 2001 Form 6251.

The 2002 line-by-line substitutions on Federal Form 8801:

• Part I, Line 3 — enter the minimum tax credit net operating loss deduction as adjusted for Nebraska;
• Part I, Line 11 — if Part III was used, exclude any capital gains that were entered on line 48 of Schedule I of the 2001 Form 1040N;
• Part I, Line 12 — enter 0; then recompute the net minimum tax on exclusion items through line 15;
• Part II, Line 19 — enter the line 26 amount from the 2001 Form 8801 recomputed under Revenue Ruling 22-01-2;
• Part II, Line 20 — enter 0;
• Part II, Line 22 — enter the recomputed 2002 regular federal income tax before credits from line 34 of the recomputed Form 6251;
• Part II, Line 23 — enter the line 33 amount of the 2002 Form 6251 recomputed under Revenue Ruling 22-02-2.

Turning it into the Nebraska credit. Multiply line 25 of the recomputed 2002 Form 8801 by 29.6% (.2960). Then:

• Full-year residents check the AMT Credit box and enter the result on line 20 of Form 1040N.
• Partial-year residents and nonresidents enter the result on line 64 of Nebraska Schedule III and write in "AMT Credit."

The Nebraska Minimum Tax Credit is nonrefundable, and the recomputed Federal Form 8801 must be attached to the 2002 Form 1040N.

What this means for you

2002 Nebraska individuals claiming the prior-year AMT credit

You can't just carry the federal Form 8801 credit onto the Nebraska return. Rebuild Form 8801 using the Nebraska-recomputed 2001 Form 6251 (Revenue Ruling 22-01-1) and the 2002 recomputed Form 6251 (Revenue Ruling 22-02-2), take line 25 × 29.6%, and report it on line 20 of Form 1040N (full-year residents) or line 64 of Schedule III (part-year residents and nonresidents). The credit is nonrefundable, so it can reduce your Nebraska tax to zero but won't generate a refund on its own.

Filers in a different tax year

This ruling is specific to 2002. Each year has its own AMT and prior-year-credit rulings with their own line references — read the ruling that matches your tax year.

Common questions

Q: What percentage converts the recomputed federal credit into the Nebraska credit?
A: 29.6% (.2960), applied to line 25 of the recomputed 2002 Federal Form 8801.

Q: Where does the Nebraska credit go on the return?
A: Full-year residents check the AMT Credit box and use line 20 of Form 1040N; part-year residents and nonresidents use line 64 of Nebraska Schedule III.

Q: Is the Nebraska Minimum Tax Credit refundable?
A: No — it is a nonrefundable credit.

Citations and references

• Neb. Rev. Stat. § 77-2715(2) — federal credit for prior year minimum tax recomputed using the Nebraska Revenue Act adjustments.
• Revenue Ruling 22-01-1 — the 2001 Nebraska recomputation of Form 6251 that supplies the prior-year figures.
• Revenue Ruling 22-02-2 — the 2002 individual AMT recomputation supplying the current-year Form 6251 amounts.

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/rr220203.pdf

Original ruling text

REVENUE RULING 22-02-3
December 27, 2002
Individual Income Tax-Computation of 2002 Credit for Prior Year Minimum Tax To Determine
Nebraska Minimum Tax Credit for the 2002 Nebraska Return. CREDIT FOR PRIOR YEAR
MINIMUM TAX, FEDERAL FORM 8801, IS TO BE RECALCULATED FOR NEBRASKA
INDIVIDUAL 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 for a
taxpayer’s 2002 U.S. Individual Income Tax Return, Federal Form 1040, must be recalculated in
order to compute the Nebraska tax credit.
Section 77-2715(2) 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.
The specific line entries and the required adjustments in recomputing the credit for prior year
minimum tax for the 2002 Nebraska Individual Income Tax Return, Form 1040N, are provided
below. Recalculate all total or computational lines to reflect adjustments made pursuant to
this ruling.
Use the amounts from the 2001 Federal Form 6251 recomputed pursuant to Revenue Ruling 2201-1 on all lines referencing 2001 Federal Form 6251.
2002 Federal Form 8801:
Part I:
Line 3: Enter the minimum tax credit net operating loss deduction as adjusted for Nebraska
purposes.
Line 11: If Part III of Form 8801 was used to make the line 11 entry, exclude any capital
gains in the calculation that were entered on line 48 of Schedule I of the 2001 Nebraska Form
1040N.
Line 12: Enter 0.
Follow federal instructions to recompute the net minimum tax on exclusion items through line 15
of the 2002 Federal Form 8801.
Part II:
Line 19: Enter the line 26 amount from the 2001 Federal Form 8801 recomputed pursuant to
Revenue Ruling 22-01-2.
Line 20: Enter 0.
Line 22: Enter the recomputed 2002 regular federal income tax before credits that was entered
on line 34 of the recomputed Federal Form 6251.

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

Revenue Ruling 22-02-3

December 27, 2002

Page 2 of 2

Line 23: Enter the line 33 amount of the 2002 Federal Form 6251 recomputed pursuant to
Revenue Ruling 22-02-2.
Multiply the amount on line 25 of the recomputed 2002 Federal Form 8801 by 29.6% (.2960). This
result is to be entered on the Nebraska Individual Income Tax Return, Form 1040N, as follows:
(a) Full-year residents are to check the AMT Credit Box and enter the result on line 20;
(b) Partial-year residents and nonresidents are to enter the result on line 64, Nebraska Schedule
III, 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 2002 Nebraska Individual Income Tax
Return, Form 1040N, when filed.
APPROVED:

Mary Jane Egr
State Tax Commissioner
December 27, 2002