SECTION 3. INTERIM SIMPLIFIED

METHOD

.01 Purpose of the interim guidance . To reduce compliance burdens and costs for certain corporations, this section 3 provides an interim simplified method to determine applicable corporation status using thresholds of $800 million and $80 million and calculating AFSI by using the AFSI adjustments described in proposed § 1.56A-12 as well as other AFSI adjustments.

.02 Definition of AFS Consolidation Entries . For purposes of this section 3, the term “AFS Consolidation Entries” means the financial accounting journal entries that are made in preparing a consolidated financial statement for a financial state

Bulletin No. 2025–26 1613 June 23, 2025

ment group in order to present the financial results of that group as if all members of the group were a single economic entity, including journal entries:

(1) To eliminate the effect of transactions between members of the financial statement group;

(2) To report amounts that are not recorded in the separate books and records of one or more members of the financial statement group; and

(3) To correct or otherwise adjust amounts that are reported in the separate books and records of one or more members of the financial statement group.

.03 Interim simplified method for deter- mining applicable corporation status .

(1) Interim simplified method . A corporation may apply the interim simplified method described in this section 3.03 for purposes of determining whether it is an applicable corporation under § 59(k)(1). Under the interim simplified method, a corporation determines whether it is an applicable corporation by applying the rules in § 59(k)(1) and (2) with the following modifications:

(a) The general AFSI test in § 59(k)(1) (B)(i) (including for purposes of § 59(k) (1)(B)(ii)(I)) is applied by substituting “$800,000,000” for “$1,000,000,000.”

(b) The second prong of the FPMG AFSI test in § 59(k)(1)(B)(ii)(II) is applied by substituting “$80,000,000” for “$100,000,000.”

(2) Rules for determining AFSI . For purposes of this section 3.03, AFSI is determined—

(a) Except as provided in section 3.03(2)(c) of this notice, (i) with regard to the adjustments set forth in § 56A(c)(2)(A), (c)(2)(B), (c) (5), (c)(9), and (c)(12) and, solely for purposes of applying § 59(k)(1)(B)(ii)(II), the adjustment set forth in § 56A(c)(4), and

(ii) without regard to any other adjustments set forth in § 56A(c) and (d),

(b) By adjusting AFSI to disregard (to the extent not already disregarded under § 56A(c)(9)):

(i) Any amount received from the transfer of an eligible credit, as defined in § 6418(f)(1)(A), that is not includible in the gross income of the taxpayer by application of § 6418(b) or is treated as tax exempt under § 6418(c)(1)(A), provided that such

amount (or portion thereof) is not otherwise disregarded under § 56A(c)(5),

(ii) Any amount received pursuant to an election under §§ 48D(d)(2) or 6417(c) that is treated as tax exempt income under § 48D(d)(2)(A)(i)(III) or 6417(c)(1)(C), provided that such amount is not otherwise disregarded under § 56A(c)(5),

(iii) Any amount paid by the transferee taxpayer, as defined in § 6418(a), to the eligible taxpayer, as defined in § 6418(f) (2), as consideration for the transfer of the eligible tax credit, as defined in § 6418(f) (1)(A), provided that the amount is not otherwise disregarded under § 56A(c)(5), and

(iv) Any increase in the transferee taxpayer’s net income or loss set forth on the taxpayer’s AFS resulting from the utilization of the eligible tax credit, provided that the increase is not otherwise disregarded under § 56A(c)(5), and

(c) After taking into account AFS Consolidation Entries, except those that eliminate transactions between persons not treated as a single employer under § 52(a) or between entities not included in an FPMG, as applicable.

(3) AFS year different than taxable year . For purposes of this section 3.03, if a corporation has an AFS that covers a period (AFS year) that differs from its taxable year—

(a) Section 59(k)(1)(B)(i) and (ii)(II) are applied by substituting “3-AFS-year period ending during such taxable year” for “3-taxable-year-period ending with such taxable year” in each place those phrases appear, and

(b) Section 59(k)(1)(E) is applied by substituting “AFS year” for “taxable year” and “3-AFS years” for “3-taxable years” in each place those phrases appear.

.04 Effect of exceeding the thresholds under the interim simplified method . If a corporation applies the interim simplified method described in section 3.03 of this notice for a taxable year and determines that its AFSI (as determined under section 3.03 of this notice) exceeds the relevant interim simplified method thresholds, then the corporation will be an applicable corporation for such taxable year only if it is determined to be an applicable corporation under § 59(k)(1) or, if the corporation follows the CAMT Proposed Regulations, proposed § 1.59-2(c).

.05 Applicability dates and reliance . A corporation may use the interim simplified method provided in section 3.03 of this notice for determining applicable corporation status for any taxable year ending on or before the date that a Treasury Decision adopting a simplified method pursuant to § 59(k)(3)(A) is published in the Federal Register and for which the original Federal income tax return has not been filed as of June 23, 2025. A corporation’s use of the interim simplified method to determine that it is not an applicable corporation for a taxable year will not cause the corporation to become subject to, or to violate, the reliance rules, including the consistency requirements, provided in the preamble of the CAMT Proposed Regulations for such taxable year.

.06 Instructions to be modified . The instructions to Form 4626, Alternative Minimum Tax – Corporations and Schedule K of Form 1120, U.S. Corporation Income Tax Return (or other appropriate instructions in the Form 1120 series), will be modified, as necessary, to reflect the availability of the interim simplified method provided in section 3.03 of this notice. The modified instructions will be posted on https://www.irs.gov.