# Prop. Treas. Reg. § 1.1502-53: Consolidated minimum tax credit. Proposed regulation, not in force. REG-112129-23, 89 FR 75062, published 2024-09-13 . Interprets 26 U.S.C. § 1502. Par. 14. Section 1.1502-53 is added to read as follows: (a) Overview. Subject to section 53 of the Code and paragraph (b) of this section, a group's consolidated minimum tax credit is allowed under this section against the group's consolidated liability for tax with respect to consolidated return years after the group's first consolidated return year beginning after 2022. Paragraph (c) of this section provides rules regarding separate return year minimum tax credits arising in separate return limitation years after the first separate return limitation year beginning after 2022. Paragraph (d) of this section provides rules regarding the allocation of the consolidated MTC to a corporation that ceases to be a member (and thus may be carried to the member's separate return years). Paragraph (e) of this section provides the date of applicability. (b) Consolidated MTC —(1) Definitions. The definitions in § 1.1502-56A(b) apply for purposes of this section, with the following additions: (i) Consolidated MTC. The term consolidated MTC means the MTC that is attributable to a tax consolidated group's CAMT liability under section 55 of the Code. (ii) MTC. The term MTC means the minimum tax credit, within the meaning of section 53(b) of the Code (as modified by section 53(e)). (2) Consolidated MTC earned in taxable year. For any consolidated return year beginning after 2022, the consolidated MTC earned in the taxable year is the tax imposed on the tax consolidated group by section 55(a) for the taxable year. (3) MTC allowed for a taxable year. Subject to the limitations in paragraphs (b)(5) and (c) of this section, the credit allowed to the tax consolidated group for a taxable year equals the sum of the consolidated MTCs of the group and the separate year MTCs of members of the group for earlier taxable years to the extent they have not been absorbed in earlier years. See paragraph (b)(4) of this section. (4) Absorption of MTCs. For purposes of determining the amount, if any, of an unused credit (whether consolidated or separate) that can be allowed in a taxable year (consolidated or separate), the amount of such unused credit that is absorbed in a prior consolidated return year is determined by: (i) Applying all unused credits that can be carried to such prior year in the order of the taxable years in which such unused credits arose, beginning with the taxable year which ends earliest; and (ii) Applying all such unused credits that can be carried to such prior year from taxable years ending on the same date on a pro rata basis. (5) Limitation. Under section 53(c), the MTC allowed for any consolidated return year cannot exceed the excess (if any) of— (i) The group's consolidated regular tax liability for such consolidated return year reduced by the sum of the credits allowable under subparts B, D, E, and F of part IV of subchapter A of chapter 1 of the Code, increased by the amount of tax imposed under section 59A of the Code for the consolidated return year; over (ii) The group's consolidated tentative minimum tax for the consolidated return year. (c) Separate return year MTC —(1) Limitation on portion of separate return year MTC arising in separate return limitation years. The aggregate of a member's minimum tax credits arising in SRLYs that are included in the consolidated MTCs allowed for all consolidated return years of the group may not exceed— (i) The aggregate for all consolidated return years of the member's contributions to the consolidated section 53(c) limitation for each consolidated return year (determined under paragraph (c)(2) of this section); reduced by (ii) The aggregate of consolidated MTCs attributable to the member (determined in the manner provided in § 1.1502-56A(j)) that are absorbed in all consolidated return years (whether or not absorbed by the member). (2) Member's contribution to the consolidated section 53(c) limitation —(i) Year in which CAMT is not incurred. For a year in which consolidated regular tax liability is greater than consolidated tentative minimum tax, a member's contribution to the consolidated section 53(c) limitation for a consolidated return year equals the member's share of the consolidated regular tax liability minus its share of consolidated tentative minimum tax. The group computes the member's share of consolidated regular tax liability by applying to the respective consolidated amounts the principles of section 1552 and the percentage method under § 1.1502-33(d)(3), assuming a 100 percent allocation of any decreased tax liability. The group computes the member's share of consolidated tentative minimum tax by multiplying the consolidated tentative minimum tax by a fraction. The denominator of the fraction is the group's AFSI, and the numerator of the fraction is the member's positive separate AFSI as defined in § 1.1502-56A(j)(2). (ii) Year in which CAMT is incurred. For a consolidated return year for which consolidated tentative minimum tax is greater than consolidated regular tax liability, the group reduces the member's aggregate contribution to the consolidated section 53(c) limitation by the member's share of the consolidated CAMT for the year as determined under § 1.1502-56A(j). (iii) Years included in computation. For purposes of computing the member's contribution under this paragraph (c)(2), the consolidated return years of the group include only those years, including the year to which a credit is carried, that the member has been continuously included in the group's consolidated return, but exclude any years after the year to which the credit is carried. (iv) Subgroup principles. The SRLY subgroup principles under § 1.1502-21(c)(2) apply for purposes of this paragraph (c)(2). The predecessor and successor principles under § 1.1502-21(f) also apply for purposes of this paragraph (c)(2). (v) Overlap with section 383. The principles under § 1.1502-21(g) apply for purposes of this paragraph (c)(2). For example, an overlap of this paragraph (c)(2) and the application of section 383 of the Code with respect to a credit carryover occurs if a corporation becomes a member of a consolidated group (that is, the SRLY event) within six months of the change date of an ownership change giving rise to a section 383 credit limitation with respect to that carryover (that is, the section 383 event), with the result that the limitation of this paragraph (c)(2) does not apply. See §§ 1.1502-21(g)(2)(ii)(A) and 1.383-1; see also § 1.1502-21(g)(4) (subgroup rules). (d) Carryovers of tax consolidated MTC to separate return years— (1) In general. If any consolidated MTC that is attributable to a member may be carried to a separate return year of the member, the amount attributable to the member is apportioned to the member and carried to the separate return year. If carried over to a separate return year, the apportioned MTC may not be carried over to an equivalent, or later, consolidated return year of the group. The amount attributable to the member is determined in the manner provided in § 1.1502-56A(j) (with regard to allocation of CAMT liability). (2) Recomputed percentage. If, for any reason, a member's portion of a consolidated MTC is absorbed or reduced on a non-pro rata basis, the percentage of the consolidated MTC attributable to each member is recomputed as provided in paragraph (d)(3) of this section. In addition, if a member with a separate MTC ceases to be a member, or if a member that ceases to be a member is allocated and apportioned MTC of the group under this paragraph (d)(2), the percentage of the consolidated MTC attributable to each remaining member is recomputed. For purposes of this paragraph (d)(2), an MTC that is permanently disallowed, eliminated, or reduced under section 108(b) of the Code or § 1.1502-28 is treated as absorbed. (3) Recomputation. The recomputed percentage of the consolidated MTC attributable to each member equals the remaining MTC attributable to the member at the time of the recomputation, divided by the sum of the remaining MTC attributable to all of the remaining members at the time of the recomputation. (4) Example. The following example illustrates the application of the rules in this paragraph (d). (i) Facts. P, S, and T are members of the P tax consolidated group (P Group), which uses the calendar year as its taxable year. P, S, and T report their financial results on a tax consolidated group AFS. For 2024, if AFSI were computed by reference to only each member's items of income, expense, gain, and loss, P would have separate AFSI of $1,000x, S would have a separate FSNOL of $100x, and T would have separate AFSI of $200x. The P Group has no regular tax liability, no liability for tax on base erosion payments under section 59A of the Code, and no CAMT foreign tax credit for 2024. Thus, the P Group's AFSI for 2024 is $1,100x, and the P Group's liability for the tentative minimum tax under section 55(b)(2)(A) is $165x ($1,100x × 15% = $165x). On December 31, 2024, T is acquired by an unrelated party and ceases to be a member of the P Group. (ii) Analysis. Of the P Group's tax consolidated MTC of $165x, as determined under section 53(b), $27.5x is apportioned to T (($200x/($200x + $1,000x)) × $165x) = $27.5x), and $137.5x remains to offset the P Group's regular income tax liability. (e) Applicability date. This section applies to consolidated return years for which the due date of the income tax return (without extensions) is after [DATE OF PUBLICATION OF FINAL RULE IN THE FEDERAL REGISTER ].