If you are exempt from setting up a new amortization base (ie, Assets-PFB-CB<Liability, but Assets-CB>Liability), can you set one up anyway?
Scenario:
Carryover Balance: $750,000
Prefunding Balance: $3.6M
MRC: $800,000
The past few years, we have been exempt from setting up an amortization base, as we've been using CB to meet the minimum. This year, if no PFB is used, we are exempt again. So we calculate the MRC, use $750k of CB and then need to use $50k of PFB.
Suddenly we're no longer exempt from setting up a base. So we set up what turns out to be a large negative base, and the MRC drops to $550k. Now, the CB will cover that amount, so we don't need to use PFB.
And now we're back to being exempt from setting up the base. So the question is, can we set up the base, even if we're exempt? If not, what do we do?
Scenario:
Carryover Balance: $750,000
Prefunding Balance: $3.6M
MRC: $800,000
The past few years, we have been exempt from setting up an amortization base, as we've been using CB to meet the minimum. This year, if no PFB is used, we are exempt again. So we calculate the MRC, use $750k of CB and then need to use $50k of PFB.
Suddenly we're no longer exempt from setting up a base. So we set up what turns out to be a large negative base, and the MRC drops to $550k. Now, the CB will cover that amount, so we don't need to use PFB.
And now we're back to being exempt from setting up the base. So the question is, can we set up the base, even if we're exempt? If not, what do we do?
Amortization Base Exemption
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