How is the federal alternative minimum tax recomputed to determine the Nebraska minimum tax on a 2013 fiduciary (estate or trust) income tax return?

Plain-English summary

This is the estate-and-trust version of Nebraska's 2013 AMT recomputation ruling (the individual counterpart is Revenue Ruling 22-13-2). It's a mechanical, year-specific worksheet: it tells fiduciaries how to translate the federal alternative minimum tax (AMT) into the Nebraska minimum tax on Form 1041N.

Why recompute? Nebraska starts from federal figures but treats some items differently, so you must redo the federal AMT using Nebraska's adjustments (Neb. Rev. Stat. § 77-2717) rather than copying the federal number over. 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 2013 federal Form 1041, Schedule I (U.S. Income Tax Return for Estates and Trusts), you redo specific lines using amounts from Form 1041N (the exact line-by-line changes are in the original text below). You follow the federal instructions to recompute the AMT through Part III, line 56 of Schedule I, then enter that line-56 figure on line 1 of the Nebraska Minimum or Other Tax Worksheet and complete the worksheet to get the amount for line 9 of Form 1041N. The recomputed Schedule I must be attached to the return.

Sunset context. The add-on minimum tax and AMT are recomputed for tax years beginning after December 31, 1978 through tax year 2013. Nebraska's Alternative Minimum Tax was eliminated by LB 308 (2013) beginning with tax year 2014, so this is historical -- it applies to the 2013 return and earlier open years. Prior-year companions: 23-12-1 (2012), 23-11-1 (2011), 23-10-1 (2010).

What this means for you

Fiduciaries filing 2013 (or amended open-year) estate/trust returns

If the estate or trust had a federal AMT for 2013, you had to recompute it for Nebraska using § 77-2717/§ 77-2716 adjustments, carry the result through the Nebraska Minimum or Other Tax Worksheet to line 9 of Form 1041N, and attach the recomputed Schedule I. Recompute the total/computational lines; leave all other entries the same as the federal computation.

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: Where does the recomputed figure end up?
A: Recompute Schedule I through Part III line 56, enter that on line 1 of the Nebraska Minimum or Other Tax Worksheet, and complete the worksheet to get the amount for line 9 of Form 1041N. Attach the recomputed Schedule I.

Q: Does this still apply?
A: Only for tax year 2013 and earlier open years. Nebraska's AMT was eliminated by LB 308 (2013) beginning with tax year 2014.

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).
• LB 308 (2013) -- eliminated Nebraska's Alternative Minimum Tax beginning with tax year 2014.
• Prior-year companions: 23-12-1 (2012), 23-11-1 (2011), 23-10-1 (2010).

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/rr231301_fid_alt_min.pdf

Original ruling text

Revenue Ruling 23-13-1
Fiduciary Income Tax
February 11, 2014

Computation of 2013 Alternative Minimum Tax to Determine
Nebraska Minimum Tax for the 2013 Nebraska Return
Issue
How should the alternative minimum tax (AMT) computed for a taxpayer’s 2013 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 (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
2013 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.
2013 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, 5 and 6 of the 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 23-13-1

February 11, 2014

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, 2013 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, 2013 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 2013 Form 1041N. The recomputed Schedule I, Federal Form 1041, must be
attached to the 2013 Form 1041N when filed.
The add-on minimum tax and the AMT should be recomputed for all taxable years beginning after
December 31, 1978 and continuing through tax year 2013. The Nebraska Alternative Minimum
Tax is eliminated by enactment of LB 308 (2013) beginning for tax year 2014.
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:
2012
2011
2010

23-12-1
23-11-1
23-10-1

APPROVED:

Kim Conroy
Tax Commissioner
February 11, 2014