How is the 2003 federal credit for prior year minimum tax (Form 8801) recomputed for an estate or trust to figure the Nebraska credit, and where does it go on Form 1041N?

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 2003 estates and trusts, and it is the credit companion to the 2003 fiduciary AMT ruling, Revenue Ruling 23-03-1.

Why recompute. Under Neb. Rev. Stat. § 77-2717, 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, the calculation uses the 2002 Federal Form 1041, Schedule I, and Form 8801 as already recomputed for Nebraska under Revenue Rulings 23-02-2 and 23-02-3.

The 2003 line-by-line substitutions on Federal Form 8801:

• Part I, Line 4 — use the federal instructions, and follow Revenue Ruling 23-02-2 for any line 8 (tax-exempt interest/dividends) or line 24 (alternative tax NOL) entries on the 2002 Schedule I;
• Part I, Line 11 — if Part III was used, exclude any capital gains that were deducted on line 8 of the 2002 Form 1041N as a special capital gains exclusion;
• 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 2002 Form 8801 recomputed under Revenue Ruling 23-02-3;
• Part II, Line 20 — enter 0;
• Part II, Line 22 — enter line 55 from the recomputed 2003 Schedule I;
• Part II, Line 23 — enter the line 54 amount from the 2003 Schedule I as recomputed under Revenue Ruling 23-03-1.

Turning it into the Nebraska credit. Multiply line 25 of the recomputed 2003 Form 8801 by 29.6 percent (.2960). Then:

• Resident estates and trusts enter the result on line 15 of Form 1041N and write in "AMT Credit."
• Nonresident estates or trusts enter the result on line 29 of Nebraska Schedule I, write in "AMT Credit," enter it as a negative number, subtract it from line 28, and put the difference on line 30.

The Nebraska Minimum Tax Credit is nonrefundable, and the recomputed Federal Form 8801 must be attached to the 2003 Form 1041N.

What this means for you

2003 estates and trusts 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 2002 figures (from Revenue Rulings 23-02-2 and 23-02-3) and the 2003 recomputed Schedule I (Revenue Ruling 23-03-1), take line 25 × 29.6%, and report it on line 15 of Form 1041N (residents) or line 29 of Schedule I (nonresidents). The credit is nonrefundable, so it can reduce your Nebraska tax to zero but won't generate a refund on its own.

Fiduciaries in a different tax year

This ruling is specific to 2003. 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 percent (.2960), applied to line 25 of the recomputed 2003 Federal Form 8801.

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

Q: Which prior-year figures do I use?
A: The 2002 Federal Form 1041, Schedule I, and Form 8801 as recomputed for Nebraska under Revenue Rulings 23-02-2 and 23-02-3.

Citations and references

• Neb. Rev. Stat. § 77-2717 — federal credit for prior year minimum tax recomputed using the Nebraska Revenue Act adjustments.
• Revenue Rulings 23-02-2 and 23-02-3 — the 2002 Nebraska recomputations that supply the prior-year figures.
• Revenue Ruling 23-03-1 — the 2003 fiduciary AMT recomputation supplying the current-year Schedule I 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/rr230302.pdf

Original ruling text

REVENUE RULING 23-03-2
December 31, 2003
Fiduciary Income Tax-Computation of 2003 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 2003 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 23-03-1 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 2003 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 2003 Federal Form 8801, use the amounts from the 2002 Federal Form 1041,
Schedule I, and Federal Form 8801 recomputed for Nebraska pursuant to Revenue Rulings 23-022 and 23-02-3.
2003 Federal Form 8801:
Part I:
Line 4: Use the federal instructions for calculating the amount to enter on line 4, and follow
Revenue Ruling 23-02-2 when completing any line 8 (tax-exempt interest or dividends) or line
24 (alternative tax net operating loss) entries on the 2002 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 8 of the 2002 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 2003 Federal Form 8801.
Part II:
Line 19: Enter the line 26 amount from the 2002 Federal Form 8801 recomputed pursuant to
Revenue Ruling 23-02-3.

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

Revenue Ruling 23-03-2

December 31, 2003

Page 2 of 2

Line 20: Enter 0.
Line 22: Enter line 55 from the recomputed 2003 Federal Form 1041, Schedule I.
Line 23: Enter the line 54 amount from the 2003 Federal Form 1041, Schedule I, as recomputed
pursuant to Revenue Ruling 23-03-1.
Multiply line 25 of the recomputed 2003 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 15 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 2003 Nebraska Fiduciary Income Tax
Return, Form 1041N, when filed.
APPROVED:

Mary Jane Egr
State Tax Commissioner
December 31, 2003