The New York State Bar Association’s Tax Section has recently released a new report, Report Number 1532 on Application of the Corporate Alternative Minimum Tax to Liabilities and to Distressed Taxpayers:

[This Report] comment[s] on the application of the corporate alternative minimum tax (“CAMT”) under Sections 55, 56A, and 59 of the Internal Revenue Code to liabilities and to transactions and circumstances commonly associated with financial distress, including debt restructurings, insolvency proceedings, and proceedings under title 11 of the United States Code. The Report builds on the Tax Section’s prior CAMT reports and addresses guidance issued to date, including the proposed regulations under REG-112129-23 and subsequent notices providing interim guidance prior to issuance of revised proposed CAMT regulations. It recommends that the [Treasury] and the [IRS], in order to provide a more consistent, predictable, and administrable framework, apply established tax principles more fully to the treatment of liabilities, cancellation of debt income, restructuring transactions, emergence from bankruptcy, and related matters.

The Report further recommends consideration of a “Tax Liability Substitution Approach” under which liabilities and the CAMT consequences arising from those liabilities generally would be determined under regular tax principles. The report describes considerations in favor of, and in opposition to, such approach and identifies various technical and interpretive issues that would be partially or fully resolved if such approach were adopted.