On August 7, 2022, the Senate passed the “Inflation Reduction Act” (the “Act”) which includes far fewer tax provisions than the previously proposed “Build Back Better Act”. The tax increases proposed by the Act mostly apply to the largest publicly traded corporations. Of note, the Act does not include any changes to the tax rules governing carried-interests, including the proposed extension of the holding period to 5 years from 3 years, nor does it increase the $10,000 cap on the state and local tax deduction.

Below is a brief summary of the proposed tax changes in the Act:

The creation of the Corporate Alternative Minimum Tax (“CAMT”), a 15% minimum tax on book income for corporations with $1 billion of “annual adjusted financial income”:

  • The CAMT only applies to corporations with an average annual adjusted financial income that exceeds $1 billion (“Income Test”). The CAMT does not apply to S-corporations, REITs, and regulated investment companies.
  • Adjusted financial income is equal to the corporation’s net income or loss reported on the corporation’s applicable financial statement (audited GAAP financial statements filed with the SEC), subject to certain adjustments.
  • The Act permits tax depreciation deductions, including accelerated depreciation, as an adjustment in the Income Test calculation. Capital intensive businesses, such as manufacturing, are likely to benefit from this adjustment, and potentially not be subject to the CAMT.
  • The Act does not include adjustments to the CAMT for certain tax incentive programs such as Qualified Opportunity Zones (“QOZs”), a program in which corporations can exclude taxable gain upon exit from an investment in a QOZ. Corporations subject to the CAMT will not realize the benefits of investing in and exiting from a QOZ, currently as proposed by the Act.
  • A corporation that is subject to the CAMT, remains subject to the CAMT in perpetuity irrespective of whether it meets the Income Test in future years.
  • The Act contemplates that Treasury Department authority will issue further regulations in carrying out the Act; therefore, taxpayers should expect further guidance in calculating the Income Test. 
  • The Joint Committee of Taxation expects that the CAMT would apply to about 150 taxpayers, annually.

1% Excise Tax on the Repurchase of Corporate Stock after December 31, 2022:

  • The Act imposes a 1 percent excise tax on the fair market value of any stock repurchased by a covered corporation during the taxable year beginning after December 31, 2022. The excise tax is non-deductible.
  • A covered corporation is any domestic corporation the stock of which is traded on an established securities market.
  • Exceptions to the excise tax include but are not limited to repurchases in connection with tax-free corporate reorganizations, repurchases treated as dividends, and in any case in which the total value of the stock repurchased does not exceed $1 million in the taxable year.
  • The effect of the excise tax to capital markets is unclear, specifically whether the excise tax will decrease corporations’ appetite for repurchasing shares. Apple (APPL) for example repurchased $86 billion of shares for year-end 2021, the highest among US corporations in 2021, which would have resulted in additional tax of $855 million.

IRS Funding:

  • The Act includes an allocation of $79.6 billion to the Internal Revenue Service (“IRS”), $45.6 billion of which specifically allocated to IRS enforcement. The Act’s enforcement provision mandates the funds to be used for legal and litigation support, criminal investigations, and digital asset monitoring and compliance activities.
  • The funding for digital asset monitoring and compliance activities reiterates the IRS focus on tax reporting of digital assets, including cryptocurrency and non-fungible tokens (“NFTs”).  For taxpayers that have been delinquent in following IRS guidance for reporting digital assets, the Act provides another reminder that the IRS is focused on enforcement in this area.

In addition to the items mentioned above, the Act also provides for numerous provisions that increase or create new incentives for green energy initiatives.

For those who are interested, here is the link to the Full Text of the Act:

The Senate bill now goes to the House of Representatives for expected approval and onto President Biden for enactment.  Any questions regarding the above should be discussed with your tax advisor.

For additional information, please contact Adi Rappoport  or Andrew Stempel, attorneys in Gunster’s Tax practice group.


This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.

About Gunster

Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 11 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Fort Lauderdale, Jacksonville, Miami, Orlando, Palm Beach, Stuart, Tallahassee, Tampa, Vero Beach, and its headquarters in West Palm Beach. With over 220 attorneys and 200 committed support staff, Gunster is ranked among the National Law Journal’s list of the 500 largest law firms and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practice areas, offices and insider’s view newsletters is available at


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