Individual AMT

Question 0

Tax preference items

Answer 0

Private activity bond interest income (on certain bonds)
Percentage depletion in excess over adjusted basis of property
Pre-1987 accelerated depreciation
(Triple P for preference)

Question 1

Adjustments versus tax preference items

Answer 1

Adjustments are specific items that may increase or decrease AMT because the treatment of an item is different for AMT than for regular tax purposes.
Tax preference items are always add backs from regular tax to get to AMT. Will always result in more income or less deductions

Question 2

Adjustments that will always increase AMTI

May be included in deductions for regular tax purposes but not for AMT

Answer 2

Tax “deductions”
Interest deductions on some home equity loans
Medical deductions (limited to excess over 10% AGI)
Miscellaneous deductions not allowed (excess over 2% deductions)
Exemptions (personal) & standard deductions
(TIMME)

Question 3

Adjustments which may ⬆️ or ⬇️ AMTI

Timing differences

Answer 3

Passive activity losses
Accelerated depreciation (post 1986 purchase)
NOL of the individual taxpayer
Installment income of a dealer
Contracts (% complete vs completed contract)
(PANIC)

Question 4

AMT Credit

Answer 4

Offsets regular tax in a year when not subject to AMT
Time period for carryover is forever
Non timing issues can’t be part of the credit (no TIMME or Triple P)

Question 5

AMT treatment of charitable contributions

Answer 5

Charitable contributions are not added back from regular tax to arrive at AMTI

Question 6

AMT permitted Credits

Answer 6

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