[wishiwasaCPA]

Two questions:

1. Single tax payer had $70,000 in taxable income before personal exemptions in the current year. He had no tax preferences. His itemized deductions were:

State and local income taxed $5,000

Interest on loan to acquire residence $6,000

Misc. Deductions that exceed 2% AGI $2,000

What did the taxpayer report as alternative minimum taxable income before the AMT exemption?

The answer is 77,000 (70k + 5k + 2k). How can that be? This is from Becker CPA review which according to the lecture says not to adjust for Misc. itemized deductions?

Four questions later:

2. Farr, an unmarried taxpayer, had $70,000 of adjusted gross income and the following deductions for regular income tax purposes:

Home mortgage interest on a loan to acquire a principal residence $11,000

Itemized deductions above threshold limitation $2,000

What is Farr’s total allowable itemized deductions for computing alternative minimum taxable income?

The answer is $11,000 because “miscellaneous itemized deductions are adjustments and, therefore, are not allowable as deductions for alterntative minimum tax purposes”

What am I missing here? Don’t those directly contradict themselves by including/not including the misc deductions and then including/not including the home mortgage too? This is so ridiculous. Just preparing myself for my third REG failure on November 30. Please help.

[UCMCPA]

The question is right, in both instances they are deducting the home interest expense.

The first question you are adjusting for items NOT allowed, so you add the 7k. In the second question, the only allowable deduction is the home interest.

Note that in the 1st question it's asking what AMTI is, the second question is asking what are the allowed deductions.

FAR - 84
AUD - 94
REG - 86
BEC - 86

[UCMCPA]

The question is right, in both instances they are deducting the home interest expense.

The first question you are adjusting for items NOT allowed, so you add the 7k. In the second question, the only allowable deduction is the home interest.

Note that in the 1st question it's asking what AMTI is, the second question is asking what are the allowed deductions.

FAR - 84
AUD - 94
REG - 86
BEC - 86

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