Corporate Alternative Minimum Tax

The Corporate Alternative Minimum Tax (AMT) is a method designed to ensure that profitable corporations pay a minimum level of tax, regardless of deductions or credits that might significantly reduce their regular tax liability. It works by recalculating income with certain adjustments and adding back specific tax preferences, resulting in a minimum taxable amount. If this alternative calculation shows the company owes more than its regular tax, the company pays the higher amount. The AMT prevents companies from using aggressive tax strategies to significantly lower their tax bills and ensures they contribute a fair share of taxes.