A massive corporate tax cut is at the center of the Republican tax overhaul, in both the House and the Senate bills.

But as lawmakers race to iron out the differences between the two bills, they will have to deal with a wrinkle that could greatly weaken many of the benefits for corporations: the corporate alternative minimum tax. The House bill would scrap it, and the Senate bill would keep it around.

As with the individual AMT, the corporate AMT aims to keep large businesses from avoiding too much of their tax bills through deductions and credits.

Keeping the corporate AMT while also cutting the corporate tax rate, experts say, could create a situation in which the revised corporate tax code undermines some of the new benefits the bills create for businesses.

It operates as a separate, parallel tax system alongside the regular corporate income tax code, and under the Senate bill, those two would collide.

"We calculate your tax under the regular system, which gives you all the available deductions and credits, and then we calculate your tax a second time using lower rates, but taking away many of the credits and deductions, and whichever tax is higher you end up paying," explained Daniel Lathrope, academic director of the graduate tax program at the University of San Francisco School of Law.

More specifically, the AMT disallows some deductions and credits, and shrinks others drastically. But it's set at 20 percent, and the Senate bill would also set the top corporate tax rate at 20 percent.

If the alternative minimum tax and the top corporate tax rate are the same rates, that messes up this entire system — the AMT excludes many deductions or credits, so that would make a business's AMT come out higher than its regular tax bill.

Because businesses pay the higher of their taxes under the AMT or the regular tax code, this means a 20 percent AMT and top corporate rate could potentially affect an overwhelming majority of businesses paying via the corporate tax code, according to Lathrope.

For example, a major corporate tax change in the new tax bill involves changing how foreign dividends are taxed — the new bill would make that income from a business's foreign arms tax-free, creating a 100 percent deduction for that income. But the size of that deduction for a business paying under the AMT would shrink dramatically, says Reuven Avi-Yonah, an international tax expert at the University of Michigan Law School.

This self-cannibalizing situation came about because of last-minute negotiations to get the votes of holdout senators, as The New York Times reported. Senators added provisions in those negotiations, such as allowing people to deduct up to $10,000 in property taxes and being more generous to so-called "pass through" businesses, that made the bill more costly. Senators are operating within strict budgetary guidelines that limit how much the bill can add to the deficit. That meant during the crafting of their bill, Senate Republicans were forced to add in provisions to add revenue, like keeping the corporate AMT, after the original bill would have eliminated it.

That gave senators another $40 billion to work with so they could add other tax breaks to the overhaul, which costs $1.4 trillion, according to the Joint Committee on Taxation.

Some Republicans have downplayed the impact of including the corporate AMT. However, there is reason to think that the impact could be great, according to one former Democratic Senate Finance Committee staffer. Lily Batchelder, now a professor at NYU Law School, explained on Twitter why she thinks including the corporate AMT could end up costing businesses much more than $40 billion.

It's not much in the grand scheme of things, but it's just one of several differences that the two chambers will have to resolve, all while keeping the final bill's cost in check. That will mean lots of trade-offs in a conference committee over the next couple of weeks. Senate Finance Committee Chairman Orrin Hatch has been a strong supporter of the research and development tax credit, which does not benefit businesses paying the AMT. That could set up a path to walking back the corporate AMT.

For their part, American businesses are worried. In a statement, the U.S. Chamber of Commerce called the inclusion of the AMT a "bombshell" and "a very unpleasant surprise," saying that it "eviscerates the impact of certain pro-growth policies like the R&D tax credit."

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