ExpertMedium1 markMultiple Choice
CPA · Question 36 · Area 3: Individual Taxation
Which of the following items is added back to regular taxable income to calculate Alternative Minimum Taxable Income (AMTI) for an individual?
Which of the following items is added back to regular taxable income to calculate Alternative Minimum Taxable Income (AMTI) for an individual?
Answer options:
A.
Charitable contributions.
B.
State and local income tax deduction.
C.
Mortgage interest on a loan used to buy the principal residence.
D.
Medical expenses in excess of 7.5% AGI.
How to approach this question
Memorize the AMT add-backs: 'PANICTS' (Passive losses, Accelerated depreciation, NOL, Installment method, Contracts, Tax deductions, Standard deduction). Taxes are the big one for individuals.
Full Answer
B.State and local income tax deduction.✓ Correct
State and local income tax deduction.
State and local taxes (SALT) deducted on Schedule A are not allowed for AMT and must be added back to taxable income to determine AMTI.
Common mistakes
Thinking charitable contributions or home mortgage interest are add-backs.
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