The IRS issued interim guidance on applying the Corporate Alternative Minimum Tax (CAMT) to partnerships and announced plans to revise and replace the September 2024 proposed regulations.
The US Internal Revenue Service (IRS) issued Notice 2025-28 on 29 July 2025, offering interim guidance to simplify how the Corporate Alternative Minimum Tax (CAMT) applies to partnerships and their partners.
The Treasury Department and the IRS also announced plans to partially withdraw the proposed CAMT regulations of September 2024 and replace them with revised proposals that incorporate elements of the new interim rules.
Taxpayers may rely on the interim guidance provided in sections 3 through 7 of this notice as described in section 9 of this notice. Section 8 of this notice modifies the reliance rules provided in the CAMT proposed regulations.
The notice allows CAMT entities (excluding partnerships) to choose between two simplified methods—“Top-Down Election” and “Taxable Income Election”—to calculate adjusted financial statement income (AFSI) from partnership investments. These options may ease information-sharing requirements and could lower income inclusion. However, both methods still involve complex calculations.
The notice outlines taxpayer-favourable but complex rules for computing AFSI inclusions related to partnership contributions and distributions. It offers two methods: a revised version of a prior proposal outlined in the CAMT proposed regulations issued in September 2024, and the full Subchapter K method, both involving binding elections. Taxpayers in partnership ventures, especially in M&A, should review these rules closely. The notice also permits excluding certain financial statement income from non-realisation events.
The full subchapter k method is A partnership (with the written consent of all CAMT entity partners that were partners at any time during the year for which the full subchapter K method is adopted and that do not have a top-down or taxable-income election in effect with respect to the partnership investment) may apply the principles of §§ 721 and 731 to determine its partners’ distributive shares of partnership AFSI resulting from partnership contributions and distributions.
Notice 2025-28 allows taxpayers to rely on its interim guidance (sections 3–7) until updated regulations or guidance are issued. It also modifies the reliance rules in the CAMT proposed regulations.
For partnership contributions and distributions in tax years ending on or before the CAMT proposed regulations are issued (September 2024), taxpayers may rely on Notice 2025-28, Notice 2023-7, or the CAMT proposed regulations.
Taxpayers can rely on sections 3–7 of Notice 2025-28 without violating the consistency or reliance rules in the preamble of the proposed CAMT regulations for that tax year.
Earlier, the IRS issued Notice 2025-27, providing interim guidance on the corporate alternative minimum tax (CAMT) introduced by the Inflation Reduction Act of 2022.
