CPA Regulation (REG) › Alternative Minimum Tax
Of the following, which are allowable itemized deductions for computing AMT income?
Home mortgage interest on a loan to acquire a principal residence
Deductible real estate property taxes
Both
Neither
Both of these options are normal itemized deductions (Sch A) however not all itemized deductions are included in AMTI.
The credit for prior year AMT liability may be carried:
Forward indefinitely
Back to the three preceding years
Back to the three preceding years or carried forward for a maximum of five years
Forward for a maximum of five years
AMT paid can be claimed as a credit against other years if the tax was paid on items that increased AMT that year but will reverse in later years. The credit is carried forward indefinitely.
The credit for prior year AMT liability may be carried:
Forward indefinitely
Back three years or forward a maximum of 15 years
Back three years
Forward for a maximum of 15 years
Like capital losses for individuals, AMT credits may be carried forward indefinitely for individual taxpayers.
Which of the following is not an adjustment or preference to arrive at alternative minimum taxable income?
Passive activity losses
Deductible contributions to individual retirement accounts
Deductible state and local taxes
Individual taxpayer net operating losses
Adjustments and preferences to arrive at AMTI include many items, such as passive activity losses, accelerated depreciation, net operating loss of an individual taxpayer, state and local taxes, the standard deduction, and private activity bond interest income. Deductible contributions to IRAs are treated the same under AMTI as for taxable income.
Of the following is not an adjustment or preference to arrive at AMTI?
Deductible contributions to individual retirement accounts
Deductible state and local taxes
Individual taxpayer net operating losses
Passive activity losses
Deductible contributions to individual retirement accounts are not an adjustment or preference in calculation a taxpayer’s AMTI. They are an adjustment in calculating adjusted gross income for regular tax purposes.
West is single, has no dependents, and does not itemize. West provides the following information regarding his current-year’s return:
What is the amount of West’s AMT tax preference items?
$9,000
$19,000
$24,000
$34,000
Among the options provided, only the percentage depletion in excess of a property’s adjusted basis is included as an AMT tax preference item.