Chapter 2 Section 3: Other Taxes

Question 1

What is the formula for AMT?

Answer 1

Regular taxable income
\+/- Adjustments
\+ Preferences
= AMTI
- Exemption
= AMT Base
x Tax Computation
= Tentative AMT Tax
- Tax Credit
= Tentative Minimum Tax
- Regular Income Tax
= AMT

Question 2

What is the formula for the exemption amount for AMT?

Answer 2

1. Exemption (given: 83400 joint)
2. AMTI
   - Threshold (158900 joint)
   = excess
   x 25%
   1-2 = exemption

Question 3

What are the adjustments and itemized deductions for AMT?

PANICTIMME

Answer 3

Passive activity losses
Accelerated depreciation
Net operating loss of the individual
Installment income of a dealer
Contracts (LT construction)
Tax deductions
Interest deductions on home equity loans - not mortgage
Medical deductions
Miscellaneous deductions not allowed
Exemptions and standard deduction

Question 4

What are the tax preference items?

PPP

Answer 4

Always add-backs
Private activity bond interest income
Percentage depletion excess
Pre-1987 accelerated depreciation

Question 5

How do you treat adjustments and itemized deductions for AMT?

Answer 5

Adj: can add or subtract
Itemized: always add

Question 6

What are the AMT credits?

FACCE

Answer 6

Foreign tax credit
Adoption credit
Child tax credit
Contributions to retirement plan credit
Earned income credit