How does a Nebraska estate or trust recompute the 1997 federal alternative minimum tax to figure the Nebraska minimum tax?

Plain-English summary

Nebraska has its own minimum tax that builds on the federal alternative minimum tax (AMT) — but the federal AMT must be recomputed with Nebraska figures first. This ruling gives estates and trusts the line-by-line method for the 1997 return, working from Federal Form 1041, Schedule I.

The rule. Under Neb. Rev. Stat. §77-2717, the federal AMT is recomputed by substituting Nebraska taxable income for federal taxable income and adjusting for items treated differently for Nebraska, across Schedule I and any form feeding it.

The Nebraska adjustments (§77-2716). In redoing the computation you exclude interest or dividends from U.S. obligations (as set forth in Revenue Ruling 22-87-2) and include interest or dividends from non-Nebraska state or local obligations. Recalculate every total or computation line to reflect these adjustments; all other entries match the federal computation. (For example, tax-exempt interest on line 4p is limited to Nebraska private activity bonds issued after August 7, 1986, and the regular tax on line 39 is computed on the recomputed Line 1 income without subtracting any foreign tax credit.)

Where the result goes. Enter line 42, Part III of the recomputed Schedule I on line 1 of the Nebraska Minimum or Other Tax Worksheet, then complete the worksheet to find the amount for line 10 of the 1997 Form 1041N. Attach the recomputed Schedule I to the return.

How far back. The add-on minimum tax and the alternative minimum tax must be recomputed for all taxable years beginning after December 31, 1978. The Department issues a parallel fiduciary ruling each year; the preceding three years are covered by Revenue Rulings 23-96-1 (1996), 23-95-1 (1995), and 23-94-1 (1994).

What this means for you

An estate or trust that owed federal AMT in 1997

Recompute Form 1041 Schedule I with the Nebraska adjustments, run the Nebraska Minimum or Other Tax Worksheet, and report the result on line 10 of Form 1041N, attaching the recomputed Schedule I.

A fiduciary or preparer coordinating the AMT rulings

This fiduciary ruling parallels the 1997 individual ruling, Revenue Ruling 22-97-1. Keep the recomputed Schedule I with your file; later-year fiduciary rulings build on the same annual template.

Common questions

Q: Does the estate or trust owe Nebraska minimum tax just because it owed federal AMT?
A: You recompute the federal AMT with Nebraska adjustments; the recomputed figure drives the Nebraska minimum tax, which can differ from the federal amount.

Q: Which line carries the result to Form 1041N for 1997?
A: Line 42, Part III of the recomputed Schedule I → line 1 of the Nebraska Minimum or Other Tax Worksheet → line 10 of Form 1041N.

Q: How many years back does this apply?
A: The add-on minimum tax and the alternative minimum tax are recomputed for all taxable years beginning after December 31, 1978.

Citations and references

• Neb. Rev. Stat. §77-2717 — recompute the federal AMT using Nebraska taxable income for fiduciaries.
• Neb. Rev. Stat. §77-2716 — the Nebraska adjustments (exclude U.S.-obligation interest, include non-Nebraska bond interest).
• Revenue Ruling 22-87-2 — cited in the ruling as the source of the U.S.-obligation interest exclusion.
• Form 1041 Schedule I; Form 1041N line 10; Revenue Ruling 22-97-1 — the forms, destination line, and companion individual ruling.

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/rr239701.pdf

Original ruling text

REVENUE RULING 23-97-1
December 17, 1997
Fiduciary Income Tax-Computation of 1997 Alternative Minimum tax to Determine Nebraska
Minimum Tax for the 1997 Nebraska Return. ALTERNATIVE MINIMUM TAX-FIDUCIARIES,
FEDERAL FORM 1041, SCHEDULE I, IS TO BE RECALCULATED FOR NEBRASKA
FIDUCIARY INCOME TAX PURPOSES TO DETERMINE THE NEBRASKA MINIMUM
TAX.
Advice has been requested as to whether the alternative minimum tax computed for a taxpayer’s
1997 U.S. Fiduciary Income Tax Return, Federal Form 1041, Schedule I, must be recalculated in
order to compute the Nebraska income tax.
Nebraska law imposes a tax on the federal alternative minimum tax recomputed to take into account
the adjustments required by the Nebraska Revenue Act of 1967, as amended. Section 77-2717 of the
Nebraska Revised Statutes 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
whose results are used in calculating the federal alternative minimum tax. Section 77-2716 of
the Nebraska Revised Statutes provides for the exclusion from adjusted gross income of interest
or dividends from U.S. obligations as set forth in Revenue Ruling 22-87-2 and the inclusion of
interest or dividends from non-Nebraska source state or local obligations.
The specific line entries and the required adjustments in recomputing the minimum tax for the
1997 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.
1997 Federal Form 1041, Schedule I:
Part I:
Line 1. Reduce the federal entry by the amounts on lines 3 and 7 of Form 1041N and add the
line 5 amount from Form 1041N.
Line 2. Enter the net operating loss deduction as adjusted for Nebraska purposes.
Line 4 p. Enter the tax-exempt interest only from Nebraska private activity bonds issued after
August 7, 1986.
Line 7. Enter the alternative tax net operating loss as adjusted for Nebraska purposes.
Part II:
Line 15. Enter the tax-exempt interest from Nebraska bonds (other than amounts included on
line 4 p.)

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

Revenue Ruling 23-97-1

December 17, 1997

Page 2 of 2

Part III:
Line 36. If Part IV of Schedule I, 1997 Federal Form 1041, was used to make the line 36 entry,
exclude any capitals gains in the calculation that were excluded on Line 7 of Form 1041N.
Line 37. Enter zero.
Line 39. 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.
Line 40. Enter zero.
Follow federal instructions to recompute the alternative minimum tax through Part III, line 42 of
Schedule I, Federal Form 1041.
Enter line 42, Part III, of the recomputed Schedule I, 1997 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 10 of the 1997 Form 1041N.
The recomputed Schedule I, Federal Form 1041, must be attached to the 1997 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
H or I, that are to be altered in the recomputation for Nebraska are provided for the following tax
years:
Tax Year

Revenue Ruling
Reference

1996

23-96-1

1995

23-95-1

1994

23-94-1

APPROVED:

M. Berri Balka
State Tax Commissioner
December 17, 1997