This ruling is being re-issued to correct an inaccurate line number reference.
The previous reference to line 32 was incorrect.

Revenue Ruling 22-10-4
Individual Income Tax

Supersedes Revenue Ruling 22-10-2 (issued February 2, 2011)

COMPUTATION OF 2010 ALTERNATIVE MINIMUM TAX TO DETERMINE
NEBRASKA MINIMUM TAX FOR THE 2010 NEBRASKA RETURN

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (Department) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of the Department and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

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In this revised ruling, the Federal Form 6251, line 3 instruction is rewritten to read as follows:

Enter the Federal Form 6251, line 3 amount, less the amount from line 8, Form 1040N.

Issue:

How is the alternative minimum tax computed for a taxpayer’s 2010 U.S. Individual Income Tax Return, Federal Form 1040 or 1040A, to be recalculated in order to compute the Nebraska alternative minimum tax?

Conclusion:

Neb. Rev. Stat. § 77-2715 provides that the federal alternative minimum tax is to 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:

Among the adjustments provided by Neb. Rev. Stat. § 77-2716 are the exclusion from federal adjusted gross income of interest or dividends from U.S. obligations as set forth in Individual Income Tax Reg-22-002.05A 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 recalculating the minimum tax for the 2010 Nebraska Individual Income Tax Return, Form 1040N, are provided below. Recalculate all total or computational lines to reflect adjustments made pursuant to this ruling. All other entries must be the same as for the federal minimum tax computation.

2010 Federal Form 6251 (Alternative Minimum Tax - Individuals):

2010 Federal Form 1040A, Alternative Minimum Tax Worksheet:

A copy of the recomputed Federal Form 6251, or Federal Form 1040A, Alternative Minimum Tax Worksheet, must be attached to the Nebraska Individual Income Tax Return, Form 1040N, when filed.

The alternative minimum tax is to be recomputed for all taxable years beginning after December 31, 1978. Other revenue rulings involving recomputation of Federal Form 6251, or the Federal Form 1040A, Alternative Minimum Tax Worksheet, are shown below for the preceding three years:

2009 22-09-1
2008 22-08-1
2007 22-07-1

APPROVED:

Douglas A. Ewald
Tax Commissioner

April 19, 2011