How does an estate or trust recompute the 2009 federal alternative minimum tax to determine the Nebraska minimum tax on a 2009 fiduciary income tax return?

Plain-English summary

This is the fiduciary (estates and trusts) counterpart to the individual AMT recomputation ruling. It's a mechanical, year-specific worksheet ruling for 2009 Form 1041N filers -- it tells you how to translate the federal alternative minimum tax on Federal Form 1041, Schedule I, into the Nebraska minimum tax.

The problem it solves: Nebraska starts from federal figures but treats some items differently, so an estate or trust must recompute the federal AMT using Nebraska's rules (Neb. Rev. Stat. § 77-2717 directs the recomputation; § 77-2716 supplies the adjustments) before carrying the result to Form 1041N. The § 77-2716 adjustments include:

• Excluding interest or dividends from U.S. obligations (which Nebraska doesn't tax).
• Including interest or dividends from non-Nebraska state or local obligations.
• Excluding non-Nebraska income from an S corporation or LLC -- and excluding any related AMT preference item to the same extent.

How it works in practice: starting from the 2009 Federal Form 1041, Schedule I, you redo specific lines using amounts from the Nebraska Form 1041N (the ruling lists the exact Part I / Part II / Part III line changes -- see the original text below). You then enter line 56, Part III, of the recomputed Schedule I on line 1 of the Nebraska Minimum or Other Tax Worksheet and complete that worksheet to determine the amount to enter on line 9 of Form 1041N. You must attach the recomputed Schedule I to the return.

Context. The add-on minimum tax and the alternative minimum tax are recomputed for all taxable years beginning after December 31, 1978. The ruling lists the equivalent prior-year fiduciary rulings: 23-08-1 (2008), 23-07-1 (2007), and 23-06-1 (2006). Nebraska later eliminated its Alternative Minimum Tax, effective for tax years beginning on or after January 1, 2014 -- so this recomputation is historical, applying to the 2009 return and other still-open years, not to current filings.

What this means for you

2009 fiduciary filers (estates and trusts) and amended-return preparers for open years

If the estate or trust had a federal AMT for 2009, you had to recompute it for Nebraska on Federal Form 1041, Schedule I, using the § 77-2717/§ 77-2716 adjustments, run the recomputed line 56 through the Nebraska Minimum or Other Tax Worksheet, and report the result on line 9 of Form 1041N. Attach the recomputed Schedule I. Recompute every total/computational line but leave all other entries the same as the federal computation.

Current filers

You don't need this. Nebraska's AMT ended for tax years beginning on or after January 1, 2014. This ruling matters only for 2009 or other still-open earlier tax years.

Common questions

Q: Which federal form does an estate or trust recompute?
A: Federal Form 1041, Schedule I (the fiduciary AMT schedule), using the Part I / Part II / Part III line changes in the ruling.

Q: Where does the recomputed AMT go on the Nebraska return?
A: Enter line 56, Part III, of the recomputed Schedule I on line 1 of the Nebraska Minimum or Other Tax Worksheet, then carry the worksheet result to line 9 of Form 1041N. Attach the recomputed Schedule I.

Q: What Nebraska adjustments apply?
A: Under § 77-2716, exclude U.S.-obligation interest/dividends and non-Nebraska S corporation/LLC income (and related preference items), and include non-Nebraska state or local obligation interest.

Q: Does this still apply?
A: Only for tax year 2009 and other still-open earlier years. Nebraska eliminated its AMT for tax years beginning on or after January 1, 2014.

Citations and references

• Neb. Rev. Stat. § 77-2717 -- directs that the fiduciary additional/minimum taxes be recomputed by substituting Nebraska taxable income for federal taxable income.
• Neb. Rev. Stat. § 77-2716 -- Nebraska adjustments (exclude U.S.-obligation interest/dividends and non-Nebraska S corp/LLC income and related preference items; include non-Nebraska state/local obligation interest).
• Prior-year fiduciary companions listed in the ruling: 23-08-1 (2008), 23-07-1 (2007), 23-06-1 (2006).

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/rr230901.pdf

Original ruling text

Revenue Ruling 23-09-1
Fiduciary Income Tax

February 3, 2010
COMPUTATION OF 2009 ALTERNATIVE MINIMUM TAX TO DETERMINE
NEBRASKA MINIMUM TAX FOR THE 2009 NEBRASKA RETURN
Issue:
How is the alternative minimum tax computed for a taxpayer’s 2009 U.S. Fiduciary Income Tax
Return, Federal Form 1041, Schedule I, to be recalculated in order to compute the Nebraska
income tax?
Conclusion:
Neb. Rev. Stat. § 77-2717 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,
the results of which are used in calculating the federal alternative minimum tax.
Analysis:
Neb. Rev. Stat. § 77-2716 provides for the exclusion from taxable income of interest or
dividends from U.S. obligations as set forth in Fiduciary Income Tax Regulation 23-004.03A
and the inclusion of interest or dividends from non-Nebraska source state or local obligations.
Neb. Rev. Stat. § 77-2716 also provides for the exclusion from Nebraska taxable income of any
non-Nebraska income from an S corporation or limited liability company (LLC). Therefore, any
associated preference item derived from the S corporation or LLC included in the alternative
minimum tax calculations should be excluded to the same extent in the Nebraska computation.
The specific line entries and the required adjustments in re-computing the minimum tax for the
2009 Nebraska Fiduciary Income Tax Return, Form 1041N, are provided below. Recalculate all
total or computation lines to reflect adjustments made pursuant to this ruling. All other entries
must be the same as for the federal minimum tax computation.
2009 U.S. Income Tax Return for Estates and Trusts, Federal Form 1041, Schedule I:
Part I:
•

Line 1. Reduce the federal entry by the amounts on lines 3 and 6 of Nebraska Fiduciary
Income Tax Return, Form 1041N, and add the line 4 amount from Form 1041N.

•

Line 7. Enter the net operating loss deduction as adjusted for Nebraska purposes.

•

Line 8. Enter the tax-exempt interest only from Nebraska private activity bonds issued
after August 7, 1986.

•

Line 24. Enter the alternative tax net operating loss deduction as adjusted for Nebraska
purposes.

Part II:
•

Line 31. Enter the tax-exempt interest from Nebraska bonds (other than amounts included
on line 8).

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

Revenue Ruling 23-09-1

February 3, 2010

Page 2 of 2

Part III:
•

Line 52. If Part IV of Schedule I, 2009 Federal Form 1041, was used to make the line
52 entry, exclude any capital gains in the calculation that were excluded on Line 6 of
Form 1041N.

•

Line 53. Enter -0-.

•

Line 55. Compute the regular federal income tax before credits on the Line 1 income as
entered above. The same federal tax method used to complete line 23, Federal Form 1041,
is to be used. Enter the computed amount without subtracting any foreign tax credit.

Follow federal instructions to recompute the alternative minimum tax through Part III, line 56 of
Schedule I, Federal Form 1041.
Enter line 56, Part III, of the recomputed Schedule I, 2009 Federal Form 1041, on line 1 of the
Nebraska Minimum or Other Tax Worksheet. Complete the worksheet to determine the amount to
enter on line 9 of the 2009 Form 1041N.
The recomputed Schedule I, Federal Form 1041, must be attached to the 2009 Nebraska Fiduciary
Income Tax Return, Form 1041N, when filed.
The add-on minimum tax and the alternative minimum tax are to be recomputed for all taxable years
beginning after December 31, 1978. The specific line entries on Federal Form 1041, Schedule I
that are to be altered in the recomputation for Nebraska are provided for the following tax years:
2008
2007
2006

23-08-1
23-07-1
23-06-1

APPROVED:

Douglas A. Ewald
Tax Commissioner
February 3, 2010