Davis Polk counsel Yixuan Long discussed the corporate alternative minimum tax (CAMT) and its implementation with Tax Notes.

The article notes that the proposed regulations implementing the CAMT unexpectedly contained references to transfer pricing and that the Treasury will have to correct this in their final proposal.

Yixuan added that some additional changes to the proposed regulations should be made and that the “Treasury should also clarify by reference to what basis — i.e., book, tax, or CAMT — should the gain or loss resulting from the adjustment be measured.”

“The current version of the proposed reg. section 1.56A-26(d)(1) is silent on the point, and the example in proposed reg. section 1.56A-26(d)(3) specifies that, before the sale, the book basis, tax basis, and CAMT basis are all zero, so it’s not clear which basis was used to compute the $10x gain,” Yixuan explained.

“CAMT and Transfer Pricing on Collision Course — Or Are They?” Tax Notes (September 30, 2024) (subscription required) 

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