Question

Who is affected by the Alternate Minimum Tax?

Answer 1

Individual,estates and trusts are subject to Alternate Minimum Tax(AMT).Partnership firms and S corporations are generally not subjects to AMT taxes but ,instaed,pass through the income and items related  to computing AMT to their partners and shareholders.Foreign persons are subject AMT only on their income effectively connected with U.S. trade or business.

The rate of AMT varies by type of Taxpayer.Through 2018,individuals,estates and trusts are subjects to the same rates of tax on long term capitals gains for regular tax and AMT.

AMT is imposed only if the tentative minimum tax exceeds the regular tax.Tentative minimum tax is the AMT rate of tax times alternative minimum taxable income (AMTI) less the AMT foreign tax credit.Regualar TAx is the regular income tax reduced only by the Foreign and possessions tax credits.In any year in which regular tax exceeeds tentative minimum tax, a credit(AMT credit) is allowed against regular tax to the extent the taxpayer has paid the AMT in any prior year.THis credit may not reduce the regular tax below tentative minimum tax.

AMTI is regular taxable income,plus or minus certain adjustments ,plus tax preference items,less the allowable exemptions.