ExpertHard1 markMultiple Choice
CPA · Question 45 · Area IV: Individual Taxation
Which of the following is an adjustment (add-back) for Alternative Minimum Tax (AMT) purposes for an individual?
Which of the following is an adjustment (add-back) for Alternative Minimum Tax (AMT) purposes for an individual?
Answer options:
A.
State and local income taxes deducted on Schedule A.
B.
Charitable contributions.
C.
Mortgage interest on acquisition indebtedness.
D.
Medical expenses in excess of 7.5% AGI.
How to approach this question
AMT Logic: 'PANICTS'. T = Taxes. State and Local Taxes are added back (disallowed) for AMT.
Full Answer
A.State and local income taxes deducted on Schedule A.✓ Correct
A
State and local taxes (income or sales, and property taxes) deducted on Schedule A for regular tax purposes are not deductible for AMT purposes and must be added back to taxable income to determine AMTI.
Common mistakes
Thinking charitable contributions or home mortgage interest are AMT preferences (they are generally allowed).
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