[Anonymous]

I’m very confused by the answer in this MCQ from Wiley’s Test Bank. Is it wrong or am I really just not grasping this whole itemized deduction/AMT thing?

Question:

For 2012, Robert had adjusted gross income of $100,000 and potential itemized deductions as follows:

Medical expenses (before % limitation) $12,000

State income taxes 4,000

Real estate taxes 3,500

Qualified housing and residence mortgage interest 10,000

Home equity mortgage interest (used to consolidate personal debts) 4,500

Charitable contributions (cash) 5,000

What are Robert’s itemized deductions allowed for alternative minimum tax purposes?

Answer: $17,000

Medical Expenses ($12,000 – (10% x $100,000) = $2,000

+Qualified mortgage interest = 10,000

+Charitable contributions = 5,000

=$17,000

1 – I thought to calculate AMT, charitable contributions are not even included in the equation

2 – I also thought that any interest that is associated with mortgage interest for a home is not included in the AMT equation

2 – I received passing scores in this area (70%) for homework, so I’m thinking this question is wrong or is worded badly because how could I get the other MCQ correct and this one wrong?

[acamp]

My 76 on REG accomplished two years ago says, I cant help ya! haha

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[acamp]

My 76 on REG accomplished two years ago says, I cant help ya! haha

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[Anonymous]

🙁 What a tease! I got so excited someone responded lol

Thanks though, acamp!

[Anonymous]

🙁 What a tease! I got so excited someone responded lol

Thanks though, acamp!

[Anonymous]

I was confused by this too since they worded it differently.

The add-backs for AMT are actually not allowed itemized deductions.

So this question is asking for what is allowed to be itemized for AMT purposes.

Charity, acquisition indebtness, and medical expenses in excess of 10% AGI will be allowed.

[Anonymous]

I was confused by this too since they worded it differently.

The add-backs for AMT are actually not allowed itemized deductions.

So this question is asking for what is allowed to be itemized for AMT purposes.

Charity, acquisition indebtness, and medical expenses in excess of 10% AGI will be allowed.

[Mars2010]

The rule we are used to is we start with regular taxable income,

then differences between regular and AMT is then added or deducted.

Like state tax, it is deducted in regular tax, but it is not acceptable in ATM

hence when calculating AM state tax is added back.

In this question it is starting from income, to reach to AMT,

And hence, differences between regular tax and AMT are not deducted,

While items that are not differences, are treated as they are treated in calculating regular tax

like charitable contributions, are deducted here as they are deducted in regular tax.

Please let me know if it is not clear.

[Mars2010]

The rule we are used to is we start with regular taxable income,

then differences between regular and AMT is then added or deducted.

Like state tax, it is deducted in regular tax, but it is not acceptable in ATM

hence when calculating AM state tax is added back.

In this question it is starting from income, to reach to AMT,

And hence, differences between regular tax and AMT are not deducted,

While items that are not differences, are treated as they are treated in calculating regular tax

like charitable contributions, are deducted here as they are deducted in regular tax.

Please let me know if it is not clear.

[Author]

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