[CageTheCPA]

I know for individuals, AMT doesn’t allow any personal exemptions or standard deductions… so I’m confused on the answer to this question:

Don Mills, a single taxpayer, had $70,000 in taxable income before personal exemptions. Mills had no tax preferences. His itemized deductions were as follows:

State and local income taxes $5,000

Home mortgage interest on loan to

acquire residence 6,000

Miscellaneous deductions that exceed

2% of adjusted gross income 2,000

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

Incorrect A.

$72,000

B.

$75,000

C.

$77,000

D.

$83,000

Taxable income before personal exemptions $70,000

State and local income taxes 5,000

Miscellaneous deductions that exceed 2%

of adjusted gross income 2,000

---

$77,000

========

Itemized deductions for AMT purposes are computed the same as for regular tax purposes, with the following exceptions:

Property and income taxes are not deductible unless they are deductible in computing adjusted gross income. (IRC Section 56(b)(1)(A)(ii))

No deduction is allowed for miscellaneous itemized deductions. (IRC Section 56(b)(1)(A)(i))

Medical expenses are deductible only to the extent they exceed 10% of the payer’s adjusted gross income. (IRC Section 56(b)(1)(B))

Qualified housing interest, rather than qualified residence interest is deductible. Qualified housing interest deductible for AMT does not include interest on home equity debt and has a narrower definition of residence which, for example, excludes boats and recreational vehicles. (IRC Section 56(e))

Net investment income (the limit on the deduction for investment interest) for AMT purposes equals the sum of the taxpayer’s interest on tax-exempt bonds that is includable in alternative minimum taxable income, net of expenses associated with that interest, plus his net investment income for regular tax purposes. (IRC Section 56(b)(1)(c))

[Credit Revenue]

I'm not sure what you are confused on. It's adding back to income not deductible items for AMT. You need a reference for AMT calculations to utilize while studying.

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[Anonymous]

a taxpayer can use standard or itemized deduction. if itemized is used, then some of those adjustments must be added back to calculate AMT – you do this instead of adding back the standard deduction, since the taxpayer did not use the standard deduction to calculate their regular tax.

but I agree with Credit Revenue, you need a list/schedule of AMT adjustments that tells you what needs to be added back. It's not as simple as standard deduction and personal exemptions because what if the person doesn't use the standard deduction? You also don't addback every itemized deduction, so you can't just look at the total itemized deduction.

What review are you using? I know Roger and the Ninja notes go through some of the adjustments

[CageTheCPA]

Sorry, posted this accidentally without explaining what confused. I kept trying to edit my original post but couldn't…

For some reason I thought you add back mortgage insurance (except qualified interest) to AMT, but since it's not deducted to arrive at AGI, it's not an add back for AMT?

I'm using Gleim (audio, book, SIMS) and NINJA (notes, MCQ/SIMS). I found this older video by Jeff on youtube that I'm going to check out https://www.youtube.com/watch?v=ns6JReRDZbQ.

[clrk217john]

Regular mortgage interest to buy a house is allowed for both Sch A (Up to principal of $1M) and AMT. Home Equity Mortgage interest is allowed on Sch A (Up to principal of $100K) but NOT for AMT purposes and must be added back.

FAR - 95, 2/17/2016
AUD - 98, 4/2/2016
REG - 92, 6/10/2016
BEC - Waiting for Score, 7/9/2016

[Author]

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