Question

When should the Alternative minimum net operating loss be computed

Answer 1

The Alternative minimum net operating loss be computed under the Section 56 of the Internal Revenue Code where the taxpayers are allowed to replace the "Net Operating Loss" figure, while calculating "Alternative Minimum Tax (AMT)", with the "Alternative Minimum Tax Net Operating Loss (AMTNOL)".

The amount of AMTNOL should be with-in the 90% of all the obligations while calculating AMT. In case the AMTNOL exceeds this limit (ie. 90% of all the obligation) it can still be carried back or forward, but the "Alternative Minimum Tax Net Operating Loss" limit will still applies to all the carry-back or in other carry-forward years.

While calculating AMTNOL following expenses are not allowed as deductions : investment charges, payment towards state and local taxes, and accelerated depreciation on assets.

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