A percentage of the gain excluded under regular tax is an AMT preference item, that is, it is included in AMT income
Since the taxes on Schedule A of an individual income tax return aren't a deduction in computing AMT income
on IRS Form 6151, the rule-of-thumb has been, for clients who are in the AMT, that it doesn't pay to pre-pay those taxes.
However, state and local taxes are not deductible when calculating AMT income
, so making that payment in 2007 won't help.
This latter technique can be particularly effective for taxpayers in the "AMT zone" in which each dollar of reduced AMT income
increases the AMT exemption amount by $1.
Banks is married and has no other income or deductions, his AMT income
is the full $464,000 settlement amount since any exemptions are phased out.
Unusually large capital gains may push AMT income
above the phase-out threshold, resulting in a partial or complete loss of the otherwise available AMT exemption.
The limit on NOL deductions from Alternative Minimum Tax (AMT) income is increased from 90 percent of AMT income
to 100 percent for NOLs generated or taken as carryforwards in tax years ending in 2001 and 2002.
When an ISO is exercised, the difference between the stock's fair market value and the ISO's exercise price is AMT income
, even if the stock is not sold at that time.
68 The optionee's tentative AMT liability is: Salaries $ 300,000 Compensation due to disposed ISO shares 8309 shares x $120 spread $ 997,080 ISO adjustment due to retained shares 3691 shares x $120 spread $ 442,920 AMT income
$ 1,740,000 Tentative AMT liability @ 28% approximate $ 487,200
A new 26% rates applies to up to $175,000 of AMT income
(above an exemption amount); a 28% rate applies to any additional AMT income
For taxable years beginning after 1989, corporate AMT income
is increased by an amount equal to 75 percent of the amount by which the adjusted current earnings (ACE) of the corporation exceed AMT income
Example 9: Corporation D, with AEP of $40,000, elects S status and reports income, in the first year, of $100,000 for regular tax purposes and AMT adjustments of $20,000 that increase reported AMT income