On the eve of the October 1, 2025, government shutdown, the Internal Revenue Service (IRS) released Notices 2025-46 and 2025-49, both relating to the Corporate Alternative Minimum Tax (CAMT). The two Notices announced significant modifications to the proposed regulations that were released at the end of last year, including with regard to applicability dates and reliance. The IRS included the proposed CAMT regulations as part of its Priority Guidance Plan (PGP), published the same day as these Notices. The guidance included in these Notices is the most taxpayer-friendly we have seen related to the CAMT and is in line with the current administration's deregulatory agenda.

Notice 2025-46 provides guidance related to three main topics on which the IRS and Department o the Treasury received comments: domestic corporate transactions, troubled companies, and tax consolidated groups. Section 3 of Notice 2025-46 describes forthcoming rules that will revise Prop. Treas. Reg. §§ 1.56A-18 and 1.56A-19 in ways that are intended to simplify the treatment of domestic corporate transactions for purposes of the CAMT, particularly with regard to basis determinations. Section 4 of Notice 2025-46 announces that forthcoming rules will revise Prop. Treas. Reg. § 1.56A-21 to align these rules relating to troubled companies more closely with the rules that apply for regular tax purposes, including sections 108(e)(6) and 108(e)(8), and to provide guidance on the application of attribute reduction rules in the context of excluded income from discharge of indebtedness in the context of the CAMT. Notice 2025-46 also announces forthcoming rules for tax consolidated groups that are intended to bring the CAMT regulations more closely in line with the consolidated return rules that apply for regular tax purposes.

Notice 2025-46 allows (but does not require) taxpayers to rely on its guidance for taxable years beginning before the final regulations or superseding guidance are published, including for the purpose of filing amended returns. If a taxpayer chooses to rely on Notice 2025-46, that will not cause the taxpayer to become subject to or violate the reliance and consistency rules outlined in the preamble to the proposed regulations. Once the final regulations are published, taxpayers are to instead rely on those final regulations, which are expected to be consistent with Notice 2025-46.

Notice 2025-49 covers even more ground, providing guidance on a bevy of CAMT-related issues. These issues include adjustments to adjusted financial statement income (AFSI) for:

• Taxpayers with regulated operations that capitalize certain costs as regulatory assets under Accounting Standards Codification (ASC) 980
• Unrealized gains and losses for certain items measured at fair value
• CAMT entities subject to the tonnage tax regime
• Net operating loss (NOL) carryovers attributable to pre-2020 embedded depreciation deductions
• Non-life insurance companies that carry back a NOL for regular tax purposes
• Amortization attributable to tax goodwill
• Accounting principle changes and AFS restatements

Beyond this substantive guidance, Notice 2025-49 provides key procedural updates. Most notable are changes to the applicability dates set forth in the proposed regulations and modifications to the rules for reliance on the proposed regulations and interim guidance. Notice 2025-49 provides that no section of the proposed regulations or any future proposed regulations will be applicable for any tax year beginning before the date on which the corresponding section of a final regulation is published. This prospective applicability date is a significant change to the complex applicability dates set forth in the proposed regulations (many of which were proposed to be retroactive). 

Notice 2025-49 allows taxpayers to rely on any section of the proposed regulations (or interim guidance) they choose, so long as they consistently follow such section in its entirety during that taxable year and each year thereafter until the final regulations are published. While this provision allows taxpayers to select which sections they wish to rely on, Notice 2025-49 imposes some additional limitations on taxpayers in the case of the international tax provisions of the CAMT. Specifically, section 3.02(b)(i) provides that if a taxpayer relies on the provisions of Prop. Treas. Reg. §§ 1.56A-4 and 1.56A-6 (preventing double counting of dividends from foreign subsidiaries), it must also apply Prop. Treas. Reg. § 1.59-4 (regarding the CAMT foreign tax credit (FTC)). However, Notice 2025-49 specifically permits such taxpayers to treat a "tax that would otherwise not qualify as an eligible tax solely due to the applicability of section 245A(d) as an eligible tax for purposes of proposed § 1.59-4 if the tax is a foreign income tax paid or accrued by the taxpayer with respect to a dividend received (or treated as received for purposes of section 245A) from a CFC in which the taxpayer is a United States shareholder." The consequence of these procedural rules is that until final regulations are issued, taxpayers may claim a CAMT FTC under section 59(l) for foreign withholding taxes paid with respect to dividends from a CFC that are subject to disallowance under section 245A(d) in the regular tax system (but are otherwise creditable) and at the same time rely on Prop. Treas. Reg. § 1.56A-4 to prevent double counting of CFC dividends.

The only ask the IRS makes is that taxpayers identify the guidance upon which they rely. Now, corporations filing a Form 4626 for the CAMT must include a statement describing their approach in completing the Form and stating the relied-upon guidance that the taxpayer has chosen. That one requirement aside, the increased flexibility Notice 2025-49 offers is a welcome change for taxpayers subject to the CAMT, but it also presents them with critical decisions in determining which regulations and which guidance to rely upon.

Taxpayers should continue to follow future updates to the CAMT guidance, particularly in light of the interaction of the CAMT with the provisions of the recently enacted One Big Beautiful Bill Act (OBBBA), but this latest chapter in the CAMT saga sheds light on the impact of the current administration's deregulatory agenda and provides taxpayers with more clarity as to how the CAMT will apply going forward.

For more information, please contact:

Layla J. Asali, lasali@milchev.com, 202-626-5866

Tyler C. Jackson, tjackson@milchev.com, 202-626-5820

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

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