AMT

Question 1

AMT Calculation

Answer 1

AGI (or post itemized income)
\+Add backs (adjustments)
\+Preference Items
=AMT Base
-Exemptions
\+AMTI (Alternative minimum tax income)
Tax due = AMTI x .26 or .28 - Regular income tax due

Question 2

Adjustments

Answer 2

\+Personal and Dependency Exemptions
\+Standard Deduction
\+Itemized Deduction (Excess 10% AGI)
\+State income and property tax
\+Misc Itemized deduction
\+Home equity loan interest
\+Qualified interest /private activity bonds
\+ISO spread

Question 3

Preference Items

Answer 3

Always +

Private Activity Muni Bond

Oil and Gas % depletion
(% depletion is the excess depletion over basis)
(cost depletion not a preference item)

Excess intangible Drilling costs
Depreciation MACRS (straight line ok)

Question 4

AMT Rates and Exemptions

Answer 4

26% up to $186,300 AMT base
28% over $186,300

Single Exemption $53,900 Phased out $119,700
married Filing Jt $83,800 Phased out $159,700

Question 5

Business

Answer 5

Not applicable to small businesses
Average gross receipts for last 3 years < 7.5M
Corporate owned Life ins subject to AMT
Buy/Sell
Key Person
Endorsement method split dollar
Deferred Comp

Do Not Affect AMT
Cross Purchase Buy Sell
Collateral split dollar

Question 6

AMT Planning

Answer 6

• Accelerate receipt of Taxable Income
• Defer paying property tax, state income tax, deductible medical expenses, charitable giving
• Defer exercise of ISO/disqualify ISO
• purchase public purpose instead of private activity muni bonds

Question 7

Refundable min tax credit

Answer 7

• greatest of 50% of long-term unused credit (> 3 years old)

- or amt of refundable credit determined in previous tax yr