How does a Nebraska estate or trust figure its 2001 credit for prior year minimum tax?

Plain-English summary

Nebraska lets an estate or trust claim a credit for prior year minimum tax — but only after the federal credit is recomputed on Nebraska's terms. Under Neb. Rev. Stat. §77-2717, the federal credit for prior year minimum tax (Federal Form 8801) must be recalculated using the adjustments required by the Nebraska Revenue Act of 1967, as amended. This ruling walks a fiduciary through that recomputation for the 2001 Nebraska Fiduciary Income Tax Return (Form 1041N).

How the recomputation works. Start from the AMT adjustments in Revenue Ruling 23-01-1 and the 2000 figures already recomputed for Nebraska under Revenue Rulings 23-00-1 and 23-00-2. Then rework the specified lines of the 2001 Federal Form 8801 (for example, excluding capital gains that were taken as a Nebraska special capital gains exclusion, and entering zero on certain lines), recalculating every total or computational line to reflect these adjustments.

Turning the recomputed figure into the Nebraska credit. Multiply line 25 of the recomputed 2001 Federal Form 8801 by 29.6 percent (.2960). That result is the Nebraska credit and is entered on Form 1041N as follows:

• Resident estates and trusts — on line 14, writing in the phrase "AMT Credit."
• Nonresident estates or trusts — on line 29, Nebraska Schedule I, writing in "AMT credit," entered as a negative number, subtracted from line 28, with the difference carried to line 30.

The Nebraska Minimum Tax Credit is nonrefundable, and the recomputed Form 8801 must be attached to the 2001 Form 1041N when filed.

Why it says "corrected." This is a corrected version of the ruling: an oversight had made some of the line-number references wrong, so the Department reissued it with the corrected line numbers for entering the "AMT Credit" amount.

What this means for you

An estate or trust that claimed a federal minimum tax credit

You can't just copy the federal credit onto the Nebraska return. Recompute Form 8801 with Nebraska adjustments, take 29.6% of recomputed line 25, and claim that as the nonrefundable Nebraska credit — attaching the recomputed Form 8801.

A preparer working from an older copy of this ruling

Make sure you are using the corrected line numbers (resident line 14; nonresident line 29 of Schedule I feeding lines 28 and 30). Earlier copies had incorrect references.

Common questions

Q: Can I use the federal credit for prior year minimum tax directly on my Nebraska return?
A: No. Section 77-2717 requires you to recompute Federal Form 8801 using Nebraska adjustments first.

Q: How do I convert the recomputed federal amount into the Nebraska credit?
A: Multiply line 25 of the recomputed 2001 Federal Form 8801 by 29.6 percent (.2960).

Q: Where does the credit go on Form 1041N, and is it refundable?
A: Resident estates/trusts use line 14; nonresidents use line 29 of Nebraska Schedule I. The credit is nonrefundable, and you must attach the recomputed Form 8801.

Citations and references

• Neb. Rev. Stat. §77-2717 — requires recomputing the federal prior-year minimum tax credit with Nebraska adjustments.
• Revenue Ruling 23-01-1 — supplies the Nebraska AMT adjustments used in the recomputation.
• Revenue Rulings 23-00-1 and 23-00-2 — the 2000 recomputed figures carried into the 2001 Form 8801.
• Federal Form 8801; Form 1041N (lines 14, 28, 29, 30); Nebraska Schedule I — the forms and lines used to compute and claim the 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/rr230102.pdf

Original ruling text

REVENUE RULING 23-01-2
[*CORRECTED] May 1, 2002
Fiduciary Income Tax-Computation of 2001 Credit for Prior Year Minimum Tax. CREDIT FOR
PRIOR YEAR MINIMUM TAX, FEDERAL FORM 8801, IS TO BE RECALCULATED FOR
NEBRASKA FIDUCIARY 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 on
Federal Form 8801 for a taxpayer’s 2001 U.S. Fiduciary Income Tax Return, Federal Form 1041,
must be recalculated in order to compute the Nebraska tax credit.
Section 77-2717 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. Further, Nebraska Revenue Ruling 23-01-1 provides the adjustments for alternative
minimum tax computations for Nebraska determinations. This ruling is to be used for purposes of
calculating the Nebraska credit for prior year minimum tax.
The specific line entries and the required adjustments in recomputing the credit for prior year
minimum tax for the 2001 Nebraska Fiduciary Income Tax Return, Form 1041N, are provided
below. Recalculate all total or computational lines to reflect adjustments made pursuant to
this ruling.
In completing the 2001 Federal Form 8801, use the amounts from the 2000 Federal Form 1041,
Schedule I, and Federal Form 8801 recomputed for Nebraska pursuant to Revenue Rulings 23-001 and 23-00-2.
2001 Federal Form 8801:
Part I:
Line 4: Use the federal instructions for calculating the amount to enter on line 4, and follow
Revenue Ruling 23-00-1 when completing any line 4p (tax-exempt interest) or line 7 (alternative
tax net operating loss) entries on the 2000 Federal Form 1041, Schedule I.
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 deducted on line 7 of the 2000 Nebraska Form 1041N as a special
capital gains exclusion.
Line 12: Enter 0.
Follow federal instructions to recompute the net minimum tax on exclusion items through line 15
of the recomputed 2001 Federal Form 8801.
Part II:
Line 19: Enter the line 26 amount from the 2000 Federal Form 8801 recomputed pursuant to
Revenue Ruling 23-00-2.
Line 20: Enter 0.

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

Revenue Ruling 23-01-2

*May 1, 2002

Page 2 of 2

Line 22: Enter line 38 from the recomputed 2001 Federal Form 1041, Schedule I.
Line 23: Enter the line 37 amount from the 2001 Federal Form 1041, Schedule I, as recomputed
pursuant to Revenue Ruling 23-01-1.
Multiply line 25 of the recomputed 2001 Federal Form 8801 by 29.6 percent (.2960). This result is
to be entered on the Nebraska Fiduciary Income Tax Return, Form 1041N, as follows:
(a) Resident estates and trusts are to enter the result on line 14 and write in the phrase, “AMT
Credit”; and
(b) Nonresident estates or trusts are to enter the result on [line 29], Nebraska Schedule I, and
write in the phrase, “AMT credit”. Enter as a negative number, subtract from [line 28], and
enter difference on [line 30*].
The Nebraska Minimum Tax Credit is a nonrefundable credit.
The recomputed Federal Form 8801 must be attached to the 2001 Nebraska Fiduciary Income Tax
Return, Form 1041N, when filed.
APPROVED:

Mary Jane Egr
State Tax Commissioner
May , 2002
*Due to an oversight, these line number references were previously incorrect. Please use the
corrected line numbers as shown in this ruling when entering the “AMT Credit” amount on the
Nebraska return.