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    Compute their tentative minimum tax

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    56. Rosa and Steve, who are married, had taxable income of $225,000 for 2005. They had positive AMT adjustments of $40,000, negative AMT adjustments of $10,000, and tax preference items of $67,500.

    a. Compute their AMTI.

    b. Compute their tentative minimum tax.

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    Solution Preview

    Calculating AMT tax liability involves four general steps:

    ? Individuals must make specific adjustments to their taxable income as calculated under the regular income tax system. These AMT adjustments can be positive or negative.

    ? Individuals must also add in certain AMT preference items to determine alternative minimum taxable income (AMTI).

    Tax preference items are items, such as accelerated depreciation, percentage depletion, or certain tax-exempt income, that are considered to have favorable tax treatment and could trigger the alternative minimum tax.

    a. Compute their AMTI.

    $225,000 + $40,000 - $10,000 - $67,500 = $187,500

    ? ...

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    This solution is comprised of a detailed explanation to answer the request of the assignment of more than 500 words of text.

    $2.19

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