R2 - AMT & Other Taxes

Question 1

a. ATM Exemption Amt

Answer 1

Single: $72,900 - [(AMTI - $518,400) * 25%]
MFJ: $113,400 - [(AMTI - $1,036,800) * 25%]
MFS: $56,700 - [(AMTI - $518,400) * 25%]

AMT Exemption is always positive.
First number in formula is Full Exemption amt
Formula is only used when AMTI is greater than full exemption amt

Question 2

2. Adjustments

Answer 2

P - PAL
A - Accelerated Depreciation 
N - NOL 
I - Installment income of a dealer
C - Contracts
T - Tax deductions - 
S - Standard Deduction 

PANIC increases or decreases
TS only increases

Question 3

3. Preference Items

Answer 3

P - Private activity bond interest income
P - Percentage Depletion deduction
P - Pre-1987 accelerated depreciation

3Ps always increase

Question 4

4. AMT Credit

Answer 4

AMT paid can be C/O as a credit over regular tax only (not AMT)
CF is forever.
AMT paid because of T, S, Private Bonds, and Percentage Depletion is never recovered.

Question 5

AMTI Computation

Answer 5

Regular Taxable Income
(+/-) Adjustments
(+) Itemized Deductions - Taxes reduced by tax refunds
(+) Preference Items
(=) AMTI

Question 6

AMT Tax Credits

Answer 6

Foreign Tax Credit
Dependent Care
Adoption
CTC
Contributions to retirement plans
Residential Energy Credit
EIC

Question 7

Net Investment Income Tax

Answer 7

Form 8960
Rate: 3.8%
Applies to Investment income over $200K (Single, HOH); $250K (MFJ)

Question 8

Kiddie Tax

Answer 8

Total Unearned income of child
(-) $1,100 (or investment expense if greater)
(=) Unearned income of child taxed at Child’s rate
(-) $1,100
(=) Unearned income of child taxed at 1041 rate

Net unearned income of child (Interest and Dividend Tax)

Can be reported on parent’s return (if $1,100 - up to $11K) or in child’s return.

Question 9

AMT calculation

Answer 9

AMTI
(-) Exemption
(=) AMT Base
(*) AMT Rate
(=) Tentative AMT

Question 10

AMT Rate

Answer 10

26% for the first $197,900

28% over $197,900

Question 11

Additional Medicare tax

Answer 11

Rate: 0.9%
Form 8959
Imposed on wages >$250K (MFJ); >$125K(MFS); $200K (others)