Question

Filing Status Exemption Phase-Out Begins at This Level of AMTI Phase-Out Complete for This level of AMTI Married filing jointly $111,700 $1,020,600 $1,467,400 Married filing separately 55,850 510,300 733,700 Head of household and single 71,700 510,300 797,100 Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: $ 19,400 10% of taxable income $ 19,400 S_78,950 $1,940 plus 12% of the excess over $19,400 $ 78,950 $168,400 $9,086 plus 22% of the excess over $78,950 $168,400 $321,450 $28,765 plus 24% of the excess over $168,400 $321,450 S408,200 $65,497 plus 32% of the excess over $321,450 $408,200 $612,350 $93,257 plus 35% of the excess over $408,200 $612,350 $164,709.50 plus 37% of the excess over $612,350 In 2019, Deon and NeNe are married filing jointly. Deon and NeNe's taxable income is $1,175,700, and they itemize their deductions as follows: real property taxes of $14,000, charitable contributions of $25,050, and mortgage interest expense of $45,600 ($700,000 acquisition debt for home). Use Exhibit 8-5 and Tax Rate Schedule for reference What is Deon and NeNe's AMT?|

Answer 1

Answer:

Calculation of Deon and NeNe's Alternative Minimum Tax (AMT):

Particulars	Amount	Amount
Taxable income		$1,175,700
Less: Mortgage Interest Expense	$45,600
Less: Charitable Contribution	$25,050	$70,650
AMT before exemption		$1,105,050
Less: AMT Exemption (Notes 1)		$111,700
AMT after exemption		$993,350
AMT (Notes 2)		$258,271

Notes:

1. AMT Exemption will be applicable as given in question for married filing jointly exemption Will be = $111,700

2.The AMT is applied at two rates i.e, 26% and 28%. The AMT exemption amount for 2019 is $111,700 for married filing jointly. In 2019, the 28 percent AMT rate applies to excess AMTI of $​​​​​​​​194,800 for all taxpayers but as given in question for married filing jointly AMTI is $1,467,400. Therefore, 26% rate is applicable.

AMT = $993,350 × 26%

AMT = $258,271