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 ?
Because tax-exempt interest from private-activity municipal bonds is a tax preference item for purposes of the AMT.
A portion of the interest on specified private activity bonds issued after December 31, 2010, may be a tax preference item subject to the alternative minimum tax.
interest is the third largest corporate tax preference item. (67) In
Interest on certain categories of private purpose bonds is tax-exempt, although tax-exempt interest on some private activity bonds is a tax preference item for both the individual and corporate alternative minimum tax (see Q 1124, Q 1440).
Under the AMT, however, ISOs are treated as a tax preference item, and thus the bargain element of the exercise of each stock is included in the AMT base.
[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.
The appreciation element in a gift of appreciated securities is a tax preference item for purposes of the alternative minimum tax period.
However, with ATRA's retroactive extension of the 100% gain exclusion and the inapplicability of any tax preference item for AMT purposes, Sec.
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.
The percentage depletion creates a tax preference item equal to $6,000: the excess of the depletion deduction over the adjusted basis of the property.