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Steve Sims, Taxpayers' Rights Advocate.

NASSCO Guidance

In our February issue of Tax News, I wrote about the Appeal of NASSCO Holdings, Inc 2010-SBE-001, November 17, 2010, which held that a corporate taxpayer may use Enterprise Zone credits and/or the Manufacturing Investment Credit (MIC) to reduce corporate alternative minimum tax (AMT). In my previous article, I said that we would be soon issuing additional guidance to help answer those frequent questions I received such as “Can I file an amended return?” and “How will this affect my credit carryover”. On March 18, 2011, we issued Notice 2011-2, addressing these questions and others.

The Notice clears up certain questions about limiting the application of the decision to corporate taxpayers only, and that it applies only to EZ and MIC credits, and not any other credits listed in subdivision (d)(1) of RTC section 23036. Additionally, the Notice states that the BOE opinion applies for taxable years beginning on or after January 1, 1994. Since this decision is retroactive, you may have clients who would be entitled to refunds if they filed an amended return. It is important however to note, that this decision would also require the credit carryover to be recalculated to determine the correct amount of the carryover as allowed or allowable in previous years.

For full details and guidance, please see Notice 2011-02.

Steve Sims, EA
Taxpayers’ Rights Advocate

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