Alternative Minimum Tax (AMT)

Question 1

Alternative Minimum Tax (AMT)

How much is paid?

R2-45

Answer 1

Pay greater of:
–regular tax
or
–tentative minimum tax

Question 2

Exemption Formula

What is the formula?

R2-48

Answer 2

Exemption Amount
-(AMTI -threshold) x 25%
=AMT exemption

Exemption Amount:
SS: $53,900
MFJ: $83,800
MFS: $41,900

Threshold Amount:
SS: $119,700
MFJ: $159,700
MFS: $79,850

Question 3

AMT Adjustments

What are they?

R2-49

Answer 3

“PANIC TIMME” mnemonic

Question 4

AMT Adjustments

What are they?
“PANIC TIMME” mnemonic

R2-49

Answer 4

*Time differences (+/-)
P-- Passive Activity Losses
A-- Accelerated depreciation (post-1986)
N-- Net Operating Loss
 I-- Installment Income of a dealer
C-- Contracts (%completion vs completed contract)

*Not Deducted for AMT (+)
T– Tax deductions
I– Interest deductions on some home “equity loans”
M– Medical deductions
M–Misc. deductions not allowed
E– Exemptions (personal) and Standard deduction

Question 5

Tax Preference Items

What are they?

R2-49

Answer 5

*Not deducted for AMT (+)
P– Private activity bond interest income
P– Percentage depletion the excess over adj. basis
P– Pre-1987 accelerated depreciation

Question 6

Credit for PY Minimum Tax (AMT credit)

R2-49

Answer 6

• -offsets regular tax (not future AMT)

- -CF forever