[Anonymous]

NINJA Question –

Hi,

can you help me understand this?

Not sure why it’s including Charity contributions for calculation of AMT. My understanding of AMT is you don’t add back Charity contributions. You add back Medical, the 2% business expense, interest ..from schedule A. Maybe I just missed this question all together.

Thanks in advance!!

Robert had current-year adjusted gross income of $100,000 and potential itemized deductions as follows:

Medical expenses (before percentage limitations) $12,000

State income taxes 4,000

Real estate taxes 3,500

Qualified housing and residence mortgage interest 10,000

Home equity mortgage interest (used to consolidate personal debts) 4,500

Charitable contributions (cash) 5,000

What are Robert’s itemized deductions for the alternative minimum tax?

Ans:

Robert’s itemized deductions for the alternative minimum tax (AMT) are as follows:

Medical expenses (before percentage limitation) $12,000

Medical expense percentage limitation (0.10 x $100,000) (10,000)

Qualified housing and residence mortgage interest 10,000

Charitable contributions 5,000

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Alternative minimum tax itemized deductions $17,000

[Anonymous]

since it asks deductions for AMT, charitable contributions will be included for deduction. If it asks the alternative minimum taxable income, charitable contributions will not be added back.

[Anonymous]

@dariodariodario Does it have the same itemized deductions as the regular tax computation? Sorry still confused.

This is how I know to calculate amt. where do the itemized deductions come from?

For AMT

Taxable Income

+/- adj/preference

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Amti b4 exemptions

(Exemptions)

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Amti

* Rate

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Tentative liability

(Regular liability)

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AMT

[Anonymous]

$2,000 medical expense + $10,000 mortgage interest + $5,000 charitable contribution = $17,000

Remember “PANIC TIMME”. Those are the items excluded from AMT deduction and charitable contribution is not one of them

P – Passive activity loss

A – Accelerated depreciation

N – Net operating loss

I – Installment income

C – Contract (% completion vs. completed contract)

T – Tax deduction – state income tax and real estate tax not allowed

I – Interest deduction on home equity loan (Mortgage OK) – Hone equity loan not allowed

M – Medical Expense (only those > 10% AGI are allowed) – only $2k of the $12k medical expenses are allowed

M – Miscellaneous deduction (those subject to 2% AGI test)

E – Exemptions (personal) and standard deductions

[Anonymous]

it does not have the same deductions as the regular tax, but as for charitable contributions, AMT and the regular tax have the same treatment

[Anonymous]

Thank you all for your responses. I think I got it guys.

[Author]

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