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13 Cards in this Set
- Front
- Back
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What are seven types of positive AMT adjustments
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AMT and ISO get PMS
1) 2) Miscellaneous itemized 3)Itemized deduction--income and property taxes; 4) bargain element in incentive stock options ISOs; 5) Personal and dependency exemption;Home equity debt unrelated to residence improvements; 6) 2.5 percent of itemized deduction Medical expenses that were applied to a 7.5 floor 7)deductionsStandard deduction amount; |
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What are the three most common AMT preference items
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Always positive =Depletion, depreciation and drilling costs B)Tax exempt interest from on private activity bond, C)Section 1202 gain exclusion businesses)
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Describe the applicationof the AMT credit
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An individual AMT paid in any one year may be used as a credit against regular income tax in a future year (indefinitely). This AMT credit is available only to the extent the AMT was attributle to deferral items (e.g. exercise of incentive stock options)
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Give examples of strategies to avoid AMT
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1. Moveincome into an AMT year; 2) Move deductions into a non AMT year; 3)Time recognition of certain AMT adjustments and tax preference items. However it is beneficial to exercise nonqualified stock options (more taxableincome)
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What is the alternative minimum tax consequence of percentage of completion method
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It must be used for AMT purposes except for home construction contracts
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What is the new tax on net investment for 2013
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A Medicare surtax applies to net investment of TPs with MAGI over $250K for MFJ and
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How is alternative minimum taxable income calculated
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REgular taxable income
+ positive AMT adustments - Negative AMT adjustments + tax preferences = AMTI |
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How is AMT calculated
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AMTI
- AMTI exemption = Minimum tax base X AMT rate =Tentative AMT tax - Regular income tax = AMT |
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What business are exempt from AMT
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In the first year all corporations are exempt. In the second year will be exempt if gross receipts were $5 million or less In the third year any corporation would be exempt if its average annual gross receipts for all prior three year periods were $7.5 million or less. Once the corporation fails the gross receipts test, the corporation becomes subject to AMT
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What are the AMT adjustments
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AMT & ISO's give PMS
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What are the phaseouts for AMT exemption
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Exemption MFJ or QW= $80K phase out $153.1- $477.1K
Exemption MFS=$40.4K; phaseout $76/950=$238.5K Sor HOH exemp=$51.9; phaseout $115.4-$323 |
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What items are NOT used to determine the AMT credit
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All exclusion items such as itemized deductions, mortgage interest, personal exemptions, standard deduction
Deferral items such as depreciation can be used to calculate the AMT credit. |
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What triggers completion of form 5251 to calculate AMT |
Accelerated depreciation, incentive stock options, tax exempt interest from private activity bonds, drilling or mining costs, depletion, income or loss from tax shelter farm activities or passive activities, Home mortgage interest, investment interest expenses, net operating loss deduction, AMT adjustments from an estate or trust, section 1202 exclusion, general business credit, Electrical vehicle credit, credits for prior-year minimum tax |
