It's the beginning of new year (2023) and of course, Congress has passed some new taxes for all the corporations in the country. While this will not affect most small businesses, I will briefly discuss them here for your consideration.
The first is contained in Notice 2023-2, which provides interim guidance regarding the application of the corporate stock repurchase excise tax until the issuance of proposed regulations.
The new code section added by the Inflation Reduction Act imposes a 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. The Treasury Department and the IRS have issued Notice 2023-2 to provide certainty to taxpayers in advance of January 1, 2023, the date on which the new excise tax will apply to stock repurchases.
Notice 2023-2 describes certain rules and procedures that the Treasury Department and the IRS intend to include in the forthcoming proposed regulations. Taxpayers may rely upon Notice 2023-2 until the issuance of the forthcoming proposed regulations.
The second is contained in Notice 2023-07, which provides interim guidance regarding the application of the new corporate alternative minimum tax (CAMT) until the issuance of proposed regulations.
The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. The CAMT generally applies to large corporations with average annual financial statement income exceeding $1 billion. The Treasury Department and the IRS have issued Notice 2023-7 to provide certainty to taxpayers in advance of the CAMT effective date.
In particular, Notice 2023-7 clarifies which corporations the CAMT applies to and how the alternative minimum tax is calculated. It also provides taxpayers with answers to basic questions about how certain transactions may be treated and certain adjustments that may be taken into account for purposes of the alternative minimum tax, including adjustments for depreciation and certain tax credits. Critically, it also gives smaller corporations an easy method for determining that the new alternative minimum tax does not apply to them.
Both of these will have a huge impact on corporate decisions and their profitability.