Question

2. Your client, who has a taxable income of $200.000, is concerned about being subject to alternative minimum tax (AMT). The following income and deductions were included in compung taxable income. Select the one item that may be added to (or subtracted from regular taxable income in calculating the AMT. a. A long-term capital gain of $90,000. b. A cash contribution to your client's church of $18,000. c. Dividend income of $80,000. d. A state income tax deduction of $8,000. 3. In 2019, Larry (a single taxpayer) has an AMTI of $175,000. What is Larry's AMT exemption this year? a. $0. b. $45,875. c. $71,700. d. $103,300.

Answer 1

1. While calculating the AMTI tax payer gets various deductions and additions inorder to arrive at the taxable AMTI, filers are required to fill Form 6251 which is used to calculate AMTI and AMT. Out of the given options we can claim state income tax of 8,000 as a deduction from AMTI. ANSWER IS D.
2. For single tax payers AMTI exemption for the year 2019 is 71,700 which is fixed deduction by IRS and which do not have any calculation basis, ANSWER IS C.