[DarkHorse]

So I’m having an extreme amount of trouble even from reading the answers to questions and explanations on both Becker and NINJA MCQ on the different treatment for the Adjustments/Itemized Deductions/Panic Timme in the AMT calculation.

I watched Jeffs video and keep reading “add-back, allowed/not-allowed, AMTI, itemized deduction” but do not understand. In some questions certain deductions are added and other not even used. Are there different rules for AMT vs AMTI calculations?

I can see that Mortgage Interest not used to buy build or improve a qualified residence is added back. If it WAS used to buy, build, or improve do you then not add it back? Becker is throwing me off with the “Home Mortgage is ok (not added back for AMT)” and that charity is not added back. But in some questions I can see that they add the charity in the equation.

When they say “add it back” are we adding it back for the total itemized deductions? or adding it back to AMT? AMTI?

Really confused! Any help is appreciated, thank you!

[Anonymous]

We are adding it back to RTI [Regular Taxable Income], that is the equivalent of deducting or excluding it from ID [Itemized Deductions].

Regular Tax and AMT Agree:
7 [CCHHTTS]
C – Charitable Contributions
C – Casualty losses
H – Home mortgage interest for qualified dwelling
H – Half (½) of the Self-Employment Tax
T – Traditional IRA Contributions
T – 10% AGI Medical Expense
S – 179 Expense

[Anonymous]

Imagine yourself as the billionaire Donald Trump. You got all the legit deductions for your 1040. Let's say $50,000,000 in total; with personal exemptions; half self-employment taxes, etc.
AMT police will tell you, you are too rich to enjoy those deductibles (above the line and below the line) You need to add them back to your income (they are not allowed as above the line deductions, standard or itemized deductions). This way IRS can put you in a higher tax bracket. That's what AMT is for.
AMT dictates the minimum tax we must pay, except for those seven (7) items above I listed above that AMT and RTI agree together. AMT and RTI reconciliation is like Financial Book and Income Tax reconciliation in FAR.

[DarkHorse]

That's a great explanation. Thank you @Amor D!

[Author]

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