Question

In each of the following cases, compute AMT (if any). For all cases, assume that taxable income does not include any dividend income or capital gain. Mr. and Mrs. BH’s taxable income on their joint return was $216,000, and their AMTI before exemption was $217,400. Mr. CK’s taxable income on his single return was $90,260, and his AMTI before exemption was $112,400. Ms. W’s taxable income on her head of household return was $203,400, and her AMTI before exemption was $260,700. Assume the taxable year is 2017. Use Individual Tax Rate Schedules.

Answer 1

Computation of AMT of mr. And mrs. BH's

AMTI =2,17,400

Threshold limit in case of joint return for 2017 = 1,60,900

So the AMTI exemption would be = 2,17,400 - 1,60,900 = 56,500 × .25 = 14125

So AMTI exemption = 84,500 - 14125 = 70,375

Here 84,500 is the exemption amount for the year 2017 for couples filling return jointly.

AMTI tax liability = 2,17,400 - 70,375 = 1,47,025

As it is less then 28% threshold limit (limit = 1,87,800) so AMT = 147025 ×26% = 38,226.5

AMT of mr Ck who file his single return

AMTI of mr Ck = 1,12,400 and pass out thredshold limit for 2017 is 1,20,700

So mr Ck will get full exemption of 54,300

So AMTI TAX LIABILITY = 1,12,400 - 54,300 = 58,100

As it is less than 28% threshold limit so AMT tax liability = 58,100 × 26% = 15,106

AMT of Ms. W on her head of household return = 2,60,700

As the pass out thredshold limit is 120700 which is less than AMTI so the exemption would be 260700 - 120700 = 140000 × .25 = 35,000

So the AMTI exemption would be 54,300 -35,000 = 19,300

So the AMTI tax liability = 2,60,700 - 19,300 = 2,41,400 × 28% = 67592

Tax rate is 28% because it is more than threshold limit that is 93,900.