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Alternative Minimum tax planning strategies

1) Given that the Alternative Minimum Tax can apply to all forms of businesses, what tax planning strategies do you think need to be utilized?

2) Why do you answer this way?

Solution Preview

The questions represent some of the most complex type of tax planning for individuals and entities because:

1. To even begin to assess possible effects of AMT, there must be a fairly accurate forecast of an income tax return to show expected taxable income for regular tax.
2. The possible changes as a result of congressional action cannot be underestimated, and those changes often happen very late in the year (as we may see this year).
3. Many individuals who pay AMT have sources of income that are not controllable, such as results of investments in other businesses, partnership income, amounts reported from estates and trusts and even bonuses from employers.

The alternative minimum tax was enacted and continues to be effective to capture income tax ...

Solution Summary

The 498 word solution explains the two types of strategies that can be employed to reduce the amount of AMT. Both methods include adequate examples to demonstrate the strategy.

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