[Anonymous]

Hello everyone,

I am a little bit confused on the allowed/disallowed items for AMT. From the Becker textbook I am using, it says:

Tax refunds, home equity interests, investment interest expenses, medical expenses in excess of 10% AGI, misc. itemized deductions in excess of 2% AGI, and personal exemption & standard deduction are NOT allowed, so they have to be added back into regular income for AMT purposes.

But in one of the multiple choices, it contradicts that logic:

Robert has 100k AGI w/ the following:

Medical expenses 12k

State income taxes 4k

Rental estate taxes 3.5k

Qualified housing & residence mortgage interest 10k

Home equity mortgage interest (used for personal debts) 4.5k

Charitable contributions 5k

What is Robert’s itemized deductions for AMT?

The answer is 17k (2k medical expenses, 10k qualified housing & residence mortgage interest, 5k charitable contributions).

I am confused. Why is the 2k medical expense included? I thought medical expenses in excess of 10% AGI are added back (aka. they are NOT included in itemized deductions for AMT).

[Wendy]

As I understand it, it use to be add back the medical itemized deduction because it was calculated at 7.5%. And for AMT it had to be recalculated at 10%. Now that the itemized and AMT calc are both 10% for those under 65, that makes the Becker answer correct. Does that make sense??

Hopeful this time around.... Back after a 2 year break!!

BEC - Feb 2013 78!!
FAR - May 2013 76!!
REG - 70! 71! 80!!
AUD - Oct 2013 79!!

FINALLY DONE!!

[Wendy]

As I understand it, it use to be add back the medical itemized deduction because it was calculated at 7.5%. And for AMT it had to be recalculated at 10%. Now that the itemized and AMT calc are both 10% for those under 65, that makes the Becker answer correct. Does that make sense??

Hopeful this time around.... Back after a 2 year break!!

BEC - Feb 2013 78!!
FAR - May 2013 76!!
REG - 70! 71! 80!!
AUD - Oct 2013 79!!

FINALLY DONE!!

[Anonymous]

Ohh I see, thanks!

Yup that makes sense now.

I thought the text meant medical expenses above 10% AGI were disallowed like the misc. itemized deductions.

[Anonymous]

Ohh I see, thanks!

Yup that makes sense now.

I thought the text meant medical expenses above 10% AGI were disallowed like the misc. itemized deductions.

[Author]

Replies