Abstract:
The Corporate Alternative Minimum Tax: Adjusted Current EarningsThe Alternative Minimum Taxable Income (AMTI) of a corporation is modified by Adjusted Current Earnings (ACE). Enacted under the Tax Reform Act of 1986, the basic objective of the Alternative Minimum Tax is to force certain taxpayers to pay an additional tax which more accurately depicts their profit. The ACE adjustment equals 75 percent of the difference between the adjusted current earnings of a corporation's AMTI, determined before including the ACE adjustment and any AMT Net Operating Loss deduction. The ACE adjustment is a hybrid method based on both earnings and profits concepts, as well as regular tax concepts. Although extremely costly and complex to calculate, the ACE adjustment seeks to impose at least some tax liability on all corporations.
