While corporate AMT has been eliminated and the individual AMT exemption has been, at least temporarily, significantly increased, IRC section 55(d)(1)(D) has remained unchanged, leaving the statutory AMT exemption amount for estates and trusts at $22,500 and the statutory exemption phaseout threshold amount at $75,000 of AMT income
. The TCJA will, however, adjust these amounts annually for inflation.
insurance premiums paid by an employer, all reduce both AMT income
A percentage of the gain excluded under regular tax is an AMT preference item, that is, it is included in AMT income
. For QSBS sold before Dec.
Generally, the spread that would be reported as compensation if the ISO were a NQSO is an addition to the employee's AMT income
in the year of exercise.
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 $1.25.
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.
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.
More specifically, the optionee's income tax liability is: Salaries $ 300,000 Compensation due to disposed ISO shares 8309 shares x $120 spread $ 997,080 Taxable income $ 1,297,080 Tax on $278,500 of income $ 83,850 Tax on additional $1,018,580 of income @ 39.6% $403,357.68 Income tax liability $487,207.68 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