Question

Final Corp has AMT Income of $365,000 for 2017. What AMT exemption amount is allowed?

Answer 1

NIL

The AMT exemption is calculated as follows:

$365,000 less the phase-out threshold of $150,000, So $215,000 income increases;

$215,000 x 25% = $53,750 a phase-out amount of $53,750 subject to $40,000. Thus, the full exemption of $40,000 is phased-out.

Note: The corporate AMT rate of 20% is then imposed on the AMTI, but only to the extent that AMTI exceeds an exemption amount of $40,000. The exemption amount of $40,000 is further subject to a phase-out as income increases; the exemption is reduced by 25% of the amount by which AMTI exceeds $150,000 up to $310,000