How does a Nebraska individual recompute the 1997 federal alternative minimum tax to figure the Nebraska minimum tax?

Plain-English summary

Nebraska has its own minimum tax that builds on the federal alternative minimum tax (AMT) — but the federal AMT must be recomputed with Nebraska figures first. This ruling gives individuals the line-by-line method for the 1997 return, working from Federal Form 6251 (or, for simpler filers, the Form 1040A Alternative Minimum Tax Worksheet).

The rule. Under Neb. Rev. Stat. §77-2715, the federal AMT is recomputed by substituting Nebraska taxable income for federal taxable income and adjusting for items treated differently for Nebraska, across Form 6251 and any form feeding it.

The Nebraska adjustments (§77-2716). In redoing the computation you exclude interest or dividends from U.S. obligations (as set forth in Revenue Ruling 22-97-2) and include interest or dividends from non-Nebraska state or local obligations. Recalculate every total or computational line to reflect these adjustments; all other entries match the federal computation. (For example, tax-exempt interest on line 13 is limited to Nebraska private activity bonds issued after August 7, 1986, line 16 uses Nebraska Tax Table Income from line 14 of Form 1040N, and the regular tax on line 27 is computed on that Nebraska Tax Table Income without subtracting any foreign tax credit.)

Where the result goes. Enter line 28 of the recomputed Form 6251 — or line 9 of the recomputed 1040A worksheet — on line 1 of the Nebraska Minimum or Other Tax Worksheet, then complete the worksheet to find the amount for line 16 of Form 1040N, or line 60 of Nebraska Schedule III for Schedule III filers. Attach the recomputed federal form to the return.

What this means for you

An individual who owed federal AMT in 1997

Recompute Form 6251 (or the 1040A worksheet) with the Nebraska adjustments, run the Nebraska Minimum or Other Tax Worksheet, and report the result on line 16 of Form 1040N (or line 60 of Schedule III), attaching the recomputed federal form.

A preparer coordinating the AMT rulings

The Department issues a parallel individual AMT ruling each year; this one is the 1997 version. The recomputed 1997 Form 6251 it produces is also the starting point that the companion fiduciary ruling, Revenue Ruling 23-97-1, and later-year rulings reference. Keep the recomputed form with your file.

Common questions

Q: Does an individual owe Nebraska minimum tax just because they owed federal AMT?
A: You recompute the federal AMT with Nebraska adjustments; the recomputed figure drives the Nebraska minimum tax, which can differ from the federal amount.

Q: Which line carries the result to Form 1040N for 1997?
A: Line 28 of the recomputed Form 6251 (or line 9 of the 1040A worksheet) → line 1 of the Nebraska Minimum or Other Tax Worksheet → line 16 of Form 1040N (line 60 of Schedule III).

Q: Where does the U.S.-obligation interest exclusion come from?
A: Section 77-2716, as set forth in Revenue Ruling 22-97-2, which excludes interest or dividends from U.S. obligations from Nebraska adjusted gross income.

Citations and references

• Neb. Rev. Stat. §77-2715 — recompute the federal AMT using Nebraska taxable income for individuals.
• Neb. Rev. Stat. §77-2716 — the Nebraska adjustments (exclude U.S.-obligation interest, include non-Nebraska bond interest).
• Revenue Ruling 22-97-2 — the companion ruling setting out the U.S.-obligation interest exclusion.
• Form 6251; Form 1040A AMT Worksheet; Form 1040N line 16; Nebraska Schedule III line 60; Revenue Ruling 23-97-1 — the forms, destination lines, and companion fiduciary ruling.

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/rr229701.pdf

Original ruling text

REVENUE RULING 22-97-1
December 17, 1997
Individual Income Tax-Computation of 1997 Alternative Minimum Income Tax to Determine
Nebraska Minimum Tax for the 1997 Nebraska Return. ALTERNATIVE MINIMUM TAX-INDIVIDUALS, FEDERAL FORM 6251, AND THE ALTERNATIVE MINIMUM TAX
WORKSHEET, FEDERAL FORM 1040A, ARE TO BE RECALCULATED FOR NEBRASKA
INDIVIDUAL INCOME TAX PURPOSES TO DETERMINE THE NEBRASKA MINIMUM
TAX.
Advice has been requested as to whether the alternative minimum tax computed for a taxpayer’s
1997 U.S. Income Tax Return, Federal Forms 1040 or 1040A, must be recalculated in order to
compute the Nebraska income tax.
Nebraska law imposes a tax on the federal alternative minimum tax recomputed to take into account
the adjustments required by the Nebraska Revenue Act of 1967, as amended. Section 77-2715 of the
Nebraska Revised Statutes provides that the additional taxes shall be recomputed by substituting
Nebraska taxable income for federal taxable income and adjusting the Nebraska alternative
minimum tax calculations for any items which are reflected differently in the determination of
federal taxable income for Nebraska purposes. This applies to any federal schedules or other forms
whose results are used in calculating the federal alternative minimum tax.
Among the adjustments provided by Section 77-2716 of the Nebraska Revised Statutes are the
exclusion from federal adjusted gross income of interest or dividends from U.S. obligations as set
forth in Revenue Ruling 22-97-2 and the inclusion of interest or dividends from non-Nebraska
source state or local obligations.
The specific line entries and the required adjustments in recomputing the minimum tax for the
1997 Nebraska Individual Income Tax Return, Form 1040N, are provided below. Recalculate all
total or computational lines to reflect adjustments made pursuant to this ruling. All other
entries must be the same as for the federal minimum tax computation.
1997 Federal Form 6251:
Line 1. Enter any standard deduction claimed on Line 6, Nebraska Form 1040N. Skip to line
6, Form 6251.
Line 3. Enter line 9 from Federal Schedule A, minus line 8, Form 1040N.
Line 6. Enter zero.
Line 13. Enter only the tax-exempt interest from Nebraska private activity bonds issued after
August 7, 1986.
Line 16. Enter line 14, Form 1040N, Nebraska Tax Table Income.
Line 17. Enter any Nebraska net operating loss deduction included on line 44, Schedule I,
Form 1040N.
Line 18. Enter the limitation amount on the disallowed itemized deductions, if any, from line 11
of the Nebraska Itemized Deductions Worksheet on page 10 of the Form 1040N instructions.
Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 22-97-1

December 17, 1997

Page 2 of 2

Line 20. Enter the alternative tax operating loss deduction as adjusted for Nebraska purposes.
Line 24. If Part IV of Form 6251 was used to make the line 24 entry, exclude any capital gains
in the calculation that were excluded on Line 42 of Nebraska Schedule I.
Line 25. Enter zero.
Line 27. Compute the regular federal income tax before credits on the Nebraska Tax Table
Income, line 14, Form 1040N. The same federal tax method used to complete line 39, Federal
Form 1040, is to be used. Enter the computed amount without subtracting any foreign tax
credit.
1997 Federal Form 1040A, Alternative Minimum Tax Worksheet:
Line 1. Enter the amount from Form 1040A, line 17, plus the amount entered on line 12, Form
1040N and minus the amount entered on line 13, Form 1040N. Add any tax-exempt interest
from Nebraska private activity bonds issued after August 7, 1986 to this amount.
Line 8. Compute the regular federal income tax before credits on the Nebraska Tax Table
Income, line 14, Form 1040N. The same federal tax method used to complete line 23, Federal
Form 1040A, is to be used.
Line 28 of the recomputed Federal Form 6251 or line 9 of the recomputed Federal Form 1040A,
Alternative Minimum Tax Worksheet, is to be entered on line 1 of the Nebraska Minimum or
Other Tax Worksheet found on page 7 of the instructions for Form 1040N. The worksheet is to be
completed to determine the amount to enter on line 16 of the Form 1040N, or, for taxpayers filing
Nebraska Schedule III, the amount to enter on line 60 of the Nebraska Schedule III.
A copy of the recomputed Federal Form 6251 or Federal Form 1040A worksheet must be attached
to the Nebraska Individual Income Tax Return, Form 1040N, when filed.
APPROVED:

M. Berri Balka
State Tax Commissioner
December 17, 1997