tax preference item

Tax preference item

Items that must be included when calculating the alternative minimum tax.

Tax Preference Item

Income or other event that is excluded when calculating one's ordinary tax liability but is included when calculating one's liability for the alternative minimum tax. That is, a tax preference item is an item that would be tax deductible under normal circumstances but is not for purposes of the alternative minimum tax. Examples include depreciation and some interest on municipal bonds.

tax preference item

An item that can be legally omitted in order to reduce taxable income when calculating an individual's tax liability by ordinary means. However, the item must be included when calculating the individual's alternative minimum tax. For example, interest paid by certain municipal bonds that is ordinarily omitted in calculating taxable income must be included when calculating the alternative minimum tax.
References in periodicals archive ?
For stock sales before May 6, 2003, 42% of the gain realized on QSBS was a tax preference item in determining AMTI.
To the extent that the Fund invests in "private activity bonds," a part of its dividends will be a Tax Preference Item.
The court rejected that argument, stating Groetzinger considered only whether a gambling activity was a trade or business for the purpose of treating a gambling loss as a tax preference item for the alternative minimum tax.
interest is the third largest corporate tax preference item.
section] 1202 is considered a tax preference item under the alternative minimum tax (AMT).
Charitable contributions of appreciated property no longer will result in an alternative minimum tax preference item for the difference between market value and the taxpayer's basis.
As a non-fundamental policy, the Fund will not invest in obligations the income from which is a tax preference item under the federal alternative minimum tax.
Further, a portion of the excluded gain is a tax preference item, so the benefit of the exclusion may be further reduced; for QSB stock sales or exchanges after May 5, 2003, 7% of the excluded gain is deemed a tax preference item and added back to taxable income in calculating alternative minimum taxable income.
It also eliminates the treatment of appreciated property as a tax preference item under the alternative minimum tax (AMT).
On their year 2 joint return, A and B reported a tax preference item of $499,521 attributable to the ISOs, and an overall alternative minimum tax (AMT) liability of $151,053.
T has regular taxable income of $212,741 and reports a tax preference item of $3,996,000 ((80,000 shares x $50) - (80,000 shares x $0.
The legal fees deducted on Schedule A are a tax preference item for A/MT purposes.