How do you recompute the 2004 federal credit for prior year minimum tax (Form 8801) to figure the Nebraska minimum tax credit on Form 1040N?

Plain-English summary

When you pay federal alternative minimum tax (AMT) in one year because of timing items, the federal system later lets you recover part of it through the credit for prior year minimum tax (Federal Form 8801). Nebraska mirrors this with its own Nebraska Minimum Tax Credit, but the federal credit must first be recomputed under Nebraska rules. This ruling is the year-specific worksheet for 2004 individuals (the companion AMT-recompute ruling for the year is 22-04-2).

Why a recompute is needed. Under Neb. Rev. Stat. § 77-2715(2), the federal credit for prior year minimum tax is recomputed using the Nebraska adjustments required by the Nebraska Revenue Act of 1967. Because the credit builds on earlier-year AMT figures, the recompute uses the 2003 Federal Form 6251 already recomputed under Revenue Ruling 22-03-2 on every line that references the 2003 Form 6251.

The 2004 line-by-line substitutions on Federal Form 8801. Recalculate all total/computational lines:

• Part I: Line 3 — minimum tax credit NOL deduction as adjusted for Nebraska; Line 11 — if Part III was used, exclude capital gains entered on line 50 of Schedule I of the 2003 Nebraska Form 1040N; Line 12 — enter 0. Then follow federal instructions to recompute the net minimum tax on exclusion items through line 15.
• Part II: Line 19 — enter the line 26 amount from the 2003 Federal Form 8801 recomputed under Revenue Ruling 22-03-2; Line 20 — enter 0; Line 22 — the recomputed 2004 regular federal income tax before credits from line 34 of the recomputed Federal Form 6251; Line 23 — the line 33 amount of the 2004 Federal Form 6251 recomputed under Revenue Ruling 22-04-2.

Turning the result into the Nebraska credit. Multiply line 25 of the recomputed 2004 Form 8801 by 29.6% (.2960), then report on Form 1040N:

• Full-year residents — check the AMT Credit Box and enter the result on line 20;
• Partial-year residents and nonresidents — enter it 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 2004 Form 1040N.

What this means for you

2004 Nebraska filers claiming the prior-year minimum tax credit

Recompute Federal Form 8801 for Nebraska rather than carrying the federal credit straight across. Work from your Nebraska-recomputed 2003 Form 6251 and Form 8801 (per 22-03-2) and the 2004 Form 6251 (per 22-04-2), multiply the line 25 result by 29.6%, and report it on line 20 (residents) or Schedule III line 64 (part-year/nonresidents).

Filers looking at other tax years

This ruling is specific to 2004, and the form lines and factor can change year to year. Use the Department's ruling for your actual tax year, paired with the matching AMT-recompute ruling (for 2004, that is 22-04-2).

Common questions

Q: Is the Nebraska Minimum Tax Credit refundable?
A: No. It is a nonrefundable credit — it can reduce Nebraska tax but is not paid out beyond your liability.

Q: What percentage converts the federal figure to the Nebraska credit for 2004?
A: Multiply the line 25 amount of the recomputed 2004 Federal Form 8801 by 29.6% (.2960).

Q: Where do I report the credit on the 1040N?
A: Full-year residents check the AMT Credit Box and use line 20; partial-year residents and nonresidents use line 64 of Nebraska Schedule III and write in "AMT Credit."

Citations and references

• Neb. Rev. Stat. § 77-2715(2) — directs that the federal credit for prior year minimum tax be recomputed using the Nebraska adjustments required by the Nebraska Revenue Act of 1967.
• Companion 2004 ruling 22-04-2 — recomputes the 2004 Federal Form 6251 (supplying the Part II line 22 and 23 figures used here).
• Prior-year companion ruling 22-03-2 — recomputes the 2003 Federal Form 8801 relied on in this computation.

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/rr220403.pdf

Original ruling text

REVENUE RULING 22-04-3
December 17, 2004
Individual Income Tax-Computation of 2004 Credit for Prior Year Minimum Tax To Determine
Nebraska Minimum Tax Credit for the 2004 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 2004 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 2004 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 2003 Federal Form 6251 recomputed pursuant to Revenue Ruling
22-03-2 on all lines referencing 2003 Federal Form 6251.
2004 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 50 of Schedule I of the 2003 Nebraska Form
1040N.
Line 12: Enter 0.
Follow federal instructions to recompute the net minimum tax on exclusion items through line 15
of the 2004 Federal Form 8801.
Part II:
Line 19: Enter the line 26 amount from the 2003 Federal Form 8801 recomputed pursuant to
Revenue Ruling 22-03-2.
Line 20: Enter 0.
Line 22: Enter the recomputed 2004 regular federal income tax before credits that was entered
on line 34 of the recomputed Federal Form 6251.
Line 23: Enter the line 33 amount of the 2004 Federal Form 6251 recomputed pursuant to
Revenue Ruling 22-04-2.
Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 22-04-3

December 17, 2004

Page 2 of 2

Multiply the amount on line 25 of the recomputed 2004 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 2004 Nebraska Individual Income Tax
Return, Form 1040N, when filed.
APPROVED:

Mary Jane Egr
State Tax Commissioner
December 17, 2004