Saying the current rules are complex and create confusion and extra work for businesses, the American Institute of CPAs recently submitted comments that request guidance and provide recommendations regarding the application of IRS Notice 2025-28 to partnerships and corporate alternative minimum tax entity partners.
The AICPA said its recommendations aim to make the rules easier to understand and follow, reduce unnecessary paperwork, and avoid double-counting or missing important tax items, which would help businesses comply with the law without facing excessive administrative burdens or uncertainty.
Notice 2025-28 generally permits a CAMT entity (other than a partnership) to elect to determine its amount of adjusted financial statement income from a partnership investment using two new, simplified methods: a “top-down election” and, in certain cases, a “taxable income Election.”
“The ability to use one or both of these simplified methods will generally be welcome news to taxpayers—both because less information sharing may be required in certain circumstances and because the use of these simplified methods may result in a smaller inclusion,” Big Four accounting firm KPMG wrote in a brief to clients. “However, taxpayers should know that both elections still likely require certain complex calculations.”
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The AICPA’s letter, dated Dec. 17, 2025, and submitted to the Treasury Department and the IRS, explains that the notice leaves important practical questions unresolved for common partnership structures, which creates uncertainty and inconsistent reporting for both taxpayers and tax practitioners.
The AICPA’s letter requests and provides recommendations for continuing guidance in the following areas:
- Interaction of the top-down election as provided in Section 3 of the notice with controlled foreign corporation AFSI inclusions under Section 56A(c)(3).
- Treatment of financial statement income items related to federal income taxes in the top-down election.
- Clarification of Section 7 of the notice and the scope of specified non-realization amounts.
- Clarification of the Full Subchapter K Method.
- Elimination of the requirement for partnerships to file an AAR for CAMT corrections.
- Clarification on determining and tracking CAMT basis.
“Our recommendations are intended to clarify how partnership applicable financial statement items and related adjustments should be reflected for CAMT purposes, making compliance more administrable and predictable,” said Michelle Zou, senior manager for tax policy and advocacy with the AICPA. “Implementing this guidance would reduce compliance risk, limit the need for amended filings, and make partnership filings more efficient.”
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