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6 Cards in this Set
- Front
- Back
What is the Alternative Minimum Tax?
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it is a tax designed to ensure that taxpayers who take a large number of tax preferences deduction pay a minimum amount of tax on their income.
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How is the AMT calculated?
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Regular Taxable income
+(-) adjustments + Prefernces --------------------------------- AMT Taxable Income <Exemption> --------------------------------- AMT Tax Base x Tax computation --------------------------------- Tentative AMT Tax <Tax Credits> --------------------------------- Tentative Minimum Tax <Regular Income Tax> --------------------------------- AMT Pay in addition to regular tax |
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What is the Exemption Amounts formula?
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Exemption amounts is 33,750 less 25% (AMTI---112,500) for single. 45,000 less 25% (AMTI---150,000) for MFJ. 22,500 less 25% (AMTI---75,000) MFS
Example: Joint exemption 45,000 AMTI <150,000> ------------- Excess <Reduction> ------------------ AMT Exemption ------------------ ------------------ |
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What are adjustments for AMT?
HINT: PANIC TIME |
P = Passive activity losses
A = Accelerated depreciation (post-1986 purchase) N = Net operating loss of the individual taxpayer I = Installment income of a dealer C = Contracts - percentage completion vs. completed contract T = Tax "deductions" I = Interest deductions on some home "equity loans" M = Medical deductions ( limited to excess over 10% AGI) E = Exemptions (personal) and standard deduction |
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What are Tax Preference Items?
HINT: PPP |
P = Private activity bond interest income ( on certain bonds)
P = Percentage depletion the excess over adjusted basis of property P = Pre-1987 accelerated depreciation |
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What is the credit for AMT?
HINT : FACCE |
F = Foreign tax credit
A = Adoption credit C = Child tax credit C = Contribution to retirement plans credit E = Earned income credit |