Question

Which of the following statements is correct?

a.         If the tentative minimum tax exceeds the regular income tax liability, the AMT is equal to the excess.

b.         The AMT exemption amounts phase down to zero as AMTI increases.

c.         The AMT tax rate for an individual taxpayer can be as high as 28%.

d.         (a) and (c) are correct, but not (b).

e.         (a.), (b) and (c) are all correct.

i'm not sure for a, but i know b and c is correct?

Answer 1

Answer -

Analysis and Conclusion -

1). An Alternative minimum tax (AMT) is a tax that ensures that taxpayers pay at least the minimum.

2). The difference between a taxpayer's AMTI and his AMT exemption is taxed.

3). If the taxpayer’s tentative minimum tax (after applying the AMT foreign tax credit) exceeds his or her regular income tax liability, the excess of the tentative minimum tax over the regular income tax is the taxpayer’s AMT.

4). The AMT exemption is much larger than the standard exemption. But it starts to disappear after a certain income level. Once taxpayer's income hits the phaseout level, 25 cents of the exemption disappears for every dollar above the phaseout.

5). The AMT exemption amounts phase down to zero as AMTI increases.

6). There are two AMT tax rates as of 2019: 26% and 28%.

In the given question, all (a), (b), (c) statements are true as per U.S. Internal Revenue Service.

Therefore, Option - (e) is Correct.