AMT was repealed for qualifying small corporations for tax years beginning after December 31, 1997 [§55(e)], but some of these businesses continue to compute and pay AMT. 

 

A small corporation qualifies for the AMT exemption if the current tax year is the corporation’s first year of operation, the corporation’s average annual gross receipts for its first three years (or portion thereof during which the corporation was in existence) after 1993 and before the current year did not exceed $5 million and the corporation’s average annual gross receipts for all subsequent three-year periods (or portion thereof during which the corporation was in existence) did not exceed $7.5 million. Once a corporation is recognized as a small corporation, it will continue to be exempt from AMT for so long as its average gross receipts for the prior three-year period do not exceed $7.5 million.

 

A corporation may not qualify for the AMT exemption or can lose its status as a small corporation if it is aggregated with one or more entities under §448(c)(2) or if the corporation has a predecessor entity under §448(c)(3)(D). Once a corporation fails to qualify for the AMT exemption, it cannot qualify in a later year [§55(e)].