Bloomberg, Treasury Eyes Guidance on Book Tax’s Effect on 2025 Tax Law:

The Treasury Department is working on guidance to address concerns that the corporate book-income tax may limit the benefits that companies derive from last year’s giant tax-and-spending law.

“We are hoping to issue guidance with respect to this issue,” Deborah Tarwasokono, a Treasury attorney-adviser, said Wednesday on a Tax Analysts webinar. She didn’t say when the guidance might be released or how it would address the matter.

The 2025 tax-and-spending law allowed companies to deduct all of their domestic research and development costs immediately and take “catch-up” deductions for past R&D costs, among other business-friendly tax breaks. But some companies have been concerned that taking advantage of those provisions could push their tax rates low enough that the corporate alternative minimum tax would kick in, thus erasing some of those benefits.

CAMT requires big, profitable companies to pay at least 15% in taxes on the income they report on their financial statements, which can be different from their taxable income. The intent is to prevent them from using tax credits and deductions and aggressive tax-planning strategies to pay little or nothing in taxes.

Bloomberg reported in December that Treasury was planning a workaround to address the companies’ concerns, but Treasury hadn’t addressed the matter publicly before Wednesday.

Tarwasokono also said Treasury was aware of certain industry-specific issues regarding the treatment of R&D costs, including the fact that the treatment of certain software costs could create a difference between book income and tax income. The department is continuing to study those issues, she said.