Question

Amee moved to the San Francisco Bay Area to work for a technology start-up 25 years ago. The start-up eventually went public, and Amee is now one of the company's most senior and successful employees.

Amee has owned a house in Nob Hill for the past 20 years. Although she is grateful that the house has increased in value significantly while she has owned it, her property tax bill also has increased substantially. Given the $10,000 maximun regular tax deduction for state and local taxes imposed by the TCJA and the facts her property taxes create an AMT adjustment, Amee has decided that she would save a significant amount in AMT if she moved to a state with lower property taxes.

Identify the flaw in Amee's logic with respect to the interaction of the $10,000 state and local tax deduction for regular tax purposes and the related AMT adjustment.

Answer 1

. flau in Amees of the Tax The logic with respect the writeraction to 410,000 state and Local Tax deduction for regular Tax purposes and the related AMT adjustment Is as follows: → The property tax deduction is an adjustment item when you are calculating taxable Income faltemative minimum Tax (AMT)] This means that although the property x deduction can reduce your Taxable Income when you are calculating regular federal Income tax, it is not deductible when Calculating the Art - You must add this deduction back In. Taxpayers who are subject to the Art will typically find that their property Tax deduction results is little or no in reduction their federal overall tax liabiuty. -