How does a Nebraska individual recompute the 1997 federal credit for prior year minimum tax to claim the Nebraska credit?

Plain-English summary

When you pay alternative minimum tax in one year, the federal system later lets you take some of it back as a credit for prior year minimum tax (Federal Form 8801). Nebraska allows a matching credit — but, like the minimum tax itself, it has to be recomputed on Nebraska terms. This ruling gives individuals the method for the 1997 return.

The rule. Under Neb. Rev. Stat. §77-2715(2), the federal credit for prior year minimum tax is recomputed using the Nebraska adjustments. Recalculate every total or computational line to reflect those adjustments.

Carry-in figures from earlier recomputations. Wherever the 1997 Form 8801 refers to the 1996 Form 6251, use the 1996 Form 6251 as recomputed under Revenue Ruling 22-96-3. For line 19, use the 1996 Form 8801 recomputed under Revenue Ruling 22-96-4; line 22 is the recomputed 1997 regular federal income tax before credits from line 27 of the recomputed Form 6251; and line 23 is the line 26 amount of the 1997 Form 6251 recomputed under Revenue Ruling 22-97-1.

Turning it into the Nebraska credit. Multiply line 25 of the recomputed 1997 Federal Form 8801 by 29.6% (.2960). Enter that result on Form 1040N as follows:

• Full-year residents — on line 19, writing in "AMT Credit."
• Partial-year residents and nonresidents — on line 56, Schedule III, writing in "AMT credit."

The Nebraska Minimum Tax Credit is nonrefundable, and the recomputed Form 8801 must be attached to the 1997 Form 1040N.

What this means for you

An individual claiming a prior-year minimum tax credit for 1997

Don't copy the federal credit. Recompute Form 8801 with Nebraska figures (drawing on the recomputed 1996 and 1997 forms), take 29.6% of recomputed line 25, and claim it on Form 1040N line 19 (residents) or Schedule III line 56 (part-year/nonresidents), attaching the recomputed Form 8801.

A preparer coordinating the AMT rulings

This credit ruling leans on companion rulings — 22-96-3 and 22-96-4 (the recomputed 1996 forms) and 22-97-1 (the recomputed 1997 Form 6251). Have those recomputations in hand before you start.

Common questions

Q: Can I use the federal prior-year minimum tax credit directly on the Nebraska return?
A: No. Section 77-2715(2) requires recomputing Form 8801 with Nebraska adjustments first.

Q: How is the Nebraska credit calculated?
A: Multiply line 25 of the recomputed 1997 Federal Form 8801 by 29.6% (.2960).

Q: Where does it go, and is it refundable?
A: Full-year residents use Form 1040N line 19; part-year residents and nonresidents use Schedule III line 56. The credit is nonrefundable, and you must attach the recomputed Form 8801.

Citations and references

• Neb. Rev. Stat. §77-2715(2) — requires recomputing the federal prior-year minimum tax credit with Nebraska adjustments.
• Revenue Rulings 22-96-3 and 22-96-4 — the recomputed 1996 Form 6251 and Form 8801 figures carried into the 1997 computation.
• Revenue Ruling 22-97-1 — the recomputed 1997 Form 6251 used for line 23.
• Federal Form 8801; Form 1040N line 19; Schedule III line 56 — the forms and destination lines for the 1997 credit.

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/rr229702.pdf

Original ruling text

REVENUE RULING 22-97-2
December 15, 1997
Individual Income Tax-Computation of 1997 Credit for Prior Year Minimum Tax To Determine
Nebraska Minimum Tax Credit for the 1997 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 1997 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 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.
Use the amounts from the 1996 Federal Form 6251 recomputed pursuant to Revenue Ruling 2296-3 on all lines referencing 1996 Federal Form 6251.
1997 Federal Form 8801:
Part I:
Line 3: Enter the minimum tax credit net operating loss deduction as adjusted for Nebraska
purposes.
Line 12: Enter 0.
Follow federal instructions to recompute the net minimum tax on exclusion items through line 15
of the 1997 Federal Form 8801.
Part II:
Line 19: Enter the line 26 amount from the recomputed 1996 Federal Form 8801 pursuant to
Revenue Ruling 22-96-4.
Line 20: Enter 0.
Line 22: Enter the recomputed 1997 regular federal income tax before credits that was entered
on line 27 of the recomputed Federal Form 6251.
Line 23: Enter the line 26 amount of the 1997 Federal Form 6251 recomputed pursuant to
Revenue Ruling 22-97-1.

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

Revenue Ruling 22-97-2

December 15, 1997

Page 2 of 2

Multiply the amount on line 25 of the recomputed 1997 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 enter the result on line 19 and write in the phrase, “AMT
Credit”;
(b) Partial-year residents and nonresidents are to enter the result on line 56, 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 1997 Nebraska Individual Income Tax
Return, Form 1040N, when filed.
APPROVED:

M. Berri Balka
State Tax Commissioner
December 15, 1997