ExpertMedium1 markMultiple Choice
CPA · Question 39 · Area I: Individual Compliance and Planning
A taxpayer is subject to the Alternative Minimum Tax (AMT) in Year 1. They paid $10,000 in state income taxes and $15,000 in charitable contributions. Which of these deductions are allowed for AMT purposes?
A taxpayer is subject to the Alternative Minimum Tax (AMT) in Year 1. They paid $10,000 in state income taxes and $15,000 in charitable contributions. Which of these deductions are allowed for AMT purposes?
Answer options:
A.
Both State Taxes and Charitable Contributions
B.
State Taxes only
C.
Charitable Contributions only
D.
Neither
How to approach this question
Identify AMT adjustments. SALT is a positive adjustment (disallowed). Charity is allowed (no adjustment).
Full Answer
C.Charitable Contributions only✓ Correct
IRC §56(b). No deduction is allowed for state, local, or foreign real or personal property taxes or income taxes for AMT purposes. Charitable contributions remain deductible.
Common mistakes
Thinking SALT is allowed; thinking Charity is disallowed.
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