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Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

Why are some of the prior C Corporation loss carryovers limited in calculating the built-in gains tax?

Answer

Capital Loss Carryover: The prior C Corporation capital loss carryover is allowed to the extent the net built-in gain is net capital gain. Capital loss carryovers cannot offset net built-in gain that is ordinary income.

Minimum Tax Credit Carryover: The prior C Corporation minimum tax credit carryover is limited under IRC section 55(e)(5). The credit allowed is reduced by 25% of the amount by which regular tax exceeds $25,000.

Related topic: 1120-US: Built-in gain tax calculation for S Corporations FAQs

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