How is the federal alternative minimum tax recomputed to determine the Nebraska minimum tax on a 2011 fiduciary (estate or trust) income tax return?

Plain-English summary

This is the 2011 estate-and-trust version of Nebraska's annual AMT-recomputation ruling (later years: 23-12-1 for 2012, 23-13-1 for 2013). It tells fiduciaries how to translate the federal alternative minimum tax (AMT) into the Nebraska minimum tax on a 2011 Form 1041N.

Why recompute? Nebraska treats some items differently from the federal return, so you redo the federal AMT using Nebraska's adjustments (Neb. Rev. Stat. § 77-2717) instead of copying the federal number. The § 77-2716 adjustments include:

• Excluding interest or dividends from U.S. obligations.
• Including interest or dividends from non-Nebraska state or local obligations.
• Excluding non-Nebraska income from an S corporation or LLC -- and any related AMT preference item to the same extent.

How it works: starting from the 2011 federal Form 1041, Schedule I, you redo specific lines using amounts from Form 1041N (the exact line-by-line changes are in the original text below). Recompute the total/computational lines, leave all other entries the same as the federal computation, and attach the recomputed Schedule I to the return.

Forward context: Nebraska's Alternative Minimum Tax was later eliminated by LB 308 (2013), beginning with tax year 2014 -- so this 2011 recomputation is historical.

What this means for you

Fiduciaries filing 2011 (or amended open-year) estate/trust returns

If the estate or trust had a federal AMT for 2011, you had to recompute it for Nebraska using § 77-2717/§ 77-2716 adjustments and attach the recomputed Schedule I to Form 1041N.

Current fiduciary filers

Not applicable -- Nebraska's AMT ended after tax year 2013 (LB 308, 2013).

Common questions

Q: Can an estate or trust use its federal AMT directly on Form 1041N?
A: No. It must be recomputed using Nebraska's adjustments (Neb. Rev. Stat. § 77-2717) before being carried to the Nebraska return.

Q: What are the main Nebraska adjustments?
A: Exclude interest/dividends from U.S. obligations and non-Nebraska S corp/LLC income (and related preference items); include interest from non-Nebraska state or local obligations (Neb. Rev. Stat. § 77-2716).

Q: Does this still apply?
A: It applies to tax year 2011 and open prior years. Nebraska's AMT was eliminated for tax year 2014 by LB 308 (2013).

Citations and references

• Neb. Rev. Stat. § 77-2717 -- adjustments used to recompute the federal fiduciary AMT for Nebraska purposes.
• Neb. Rev. Stat. § 77-2716 -- Nebraska adjustments (exclude U.S.-obligation interest/dividends and non-Nebraska S corp/LLC income; include non-Nebraska state/local obligation interest).
• Later development: Nebraska's Alternative Minimum Tax was eliminated by LB 308 (2013) beginning with tax year 2014.

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/rr231101.pdf

Original ruling text

Revenue Ruling 23-11-1
Fiduciary Income Tax

January 24, 2012
COMPUTATION OF 2011 ALTERNATIVE MINIMUM TAX TO DETERMINE
NEBRASKA MINIMUM TAX FOR THE 2011 NEBRASKA RETURN
ISSUE.
How should the alternative minimum tax (AMT) computed for a taxpayer’s 2011 U.S. Fiduciary
Income Tax Return, Federal Form 1041, Schedule I, be recalculated to compute the Nebraska
income tax?
CONCLUSION.
The federal AMT must be recomputed using the adjustments required by Neb. Rev. Stat. § 77-2717.
This will facilitate the computation for 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 AMT.
ANALYSIS.
Among the adjustments provided by Neb. Rev. Stat. § 77-2716 are 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 AMT calculations should be excluded to the same extent in the Nebraska computation.
The specific line entries and the required adjustments in recomputing the minimum tax for the 2011
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.
2011 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 5 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.

Nebraska Department of Revenue, PO Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 23-11-1

January 24, 2012

Page 2 of 2

Part II –
•

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

Part III –
•

Line 52. If Part IV of Schedule I, 2011 Federal Form 1041, was used to make the
line 52 entry, exclude any capital gains in the calculation that were excluded on line 5 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,
must be used. Enter the computed amount without subtracting any foreign tax credit.

Follow federal instructions to recompute the AMT through Part III, line 56 of Schedule I, Federal
Form 1041.
Enter line 56, Part III, of the recomputed Schedule I, 2011 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 8 of the 2011 Form 1041N.
The recomputed Schedule I, Federal Form 1041, must be attached to the 2011 Nebraska Fiduciary
Income Tax Return, Form 1041N, when filed.
The add-on minimum tax and the AMT 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:
2010
2009
2008

23-10-1
23-09-1
23-08-1

APPROVED:

Douglas A. Ewald
Tax Commissioner
January 24, 2012