Alternative Minimum Tax

Question 1

AMT Tax Preference Adjustments

Answer 1

(1) Accelerated Cost Recovery Deductions for: Real Property excess S-L, Leased Property excess S-L, Personal Property excess 150% dec-bal. (2)Oil & Gas: % depletion is excess of adjusted basis, excess intangible drilling costs, research, experimental, exploration and development costs in excess of 10-year amortization, circulation expenses in excess 3-year period. (3) Pollution rapid amortization; (4) Completed Contract method; (5) tax-exempt interest on qualified private activity muni bonds except 2009 & 2010. (6) Passive farm losses. (7) 7% of gain excluded from sale of qualified small business stock

Question 2

Allowable deductions for computation of AMT

Answer 2

(1) Medical expenses in excess of 10% AGI, (2)Casualty losses in excess of 10 AGI and $100 floor, (3) Gambling losses to extent of gambling winnings, (4) Qualified Housing Interest, (5) Investment Interest Expenses to Extent of Qualified Net Investment Income, (6) Estate Taxes Paid on Decedent’s income; (7) Charitable contribution deduction

Question 3

Disallowed Schedule A Deductions

Answer 3

(1) All deductions are disallowed except those specifically listed, (2) Generally, state, local, and property taxes are not allowed, nor are (3) Tier II Miscellaneous Deductions

Question 4

AMT Income Exemption

Answer 4

(1) Married, filing separately $41,050, phaseout $78,250, (2) Married, filing jointly $82,100 exemption, phaseout $156,500 (x2); (3) Single, $52,800 exemption, phaseout $117,300 (/.66) (4) Estates and Trusts $23,500 exemption, phaseout $117,300
Exemption, 41,52,23,82

Question 5

Phaseout

Answer 5

1) The phaseout decreases the exemption amount, thus increasing AMT (2) $78,250, $117,300, $78,250, $156,500, 1, .666, 1, 2