What is Alternative minimum tax (AMT)?
In short
The alternative minimum tax (AMT) is a parallel tax system that recalculates income with fewer deductions and preferences. A taxpayer pays the AMT if the tentative minimum tax is higher than regular tax.
Key takeaways
- Common adjustments include state and local taxes, the standard deduction, the incentive stock option bargain element and depreciation differences.
- An exemption amount reduces alternative minimum taxable income and phases out at higher incomes.
- AMT from timing items creates a minimum tax credit usable in later years.
Where it's tested
REG: Filing Status, Credits & Alternative Minimum Tax — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In computing alternative minimum taxable income, which item is an adjustment or preference that increases AMTI?