In 2015, Deon and NeNe are married filing jointly. They have three dependent chi
ID: 2468999 • Letter: I
Question
In 2015, Deon and NeNe are married filing jointly. They have three dependent children under 18 years of age. Deon and NeNe’s AGI is $830,600, their taxable income is $749,600, and they itemize their deductions as follows: real property taxes of $15,100, state income taxes of $41,000, miscellaneous itemized deductions of $7,800 (subject to but in excess of 2 percent AGI floor), charitable contributions of $6,700, and mortgage interest expense of $44,600 ($13,800 of which is attributable to a home-equity loan used to buy a new car). What is Deon and NeNe's AMT? (Round nearest whole number)
Explanation / Answer
AMT
Description
Amount
Reference
(1) Regular taxable income
$ 749,600.00
(2) Personal exemptions
$ 19,000.00
3,800 ×5
(3) Real property taxes
$ 15,100.00
(4) State income taxes
$ 41,000.00
(5) Miscellaneous itemized deduction subject to but in excess of 2% AGI floor
$ 7,800.00
(6) Home equity interest expense (mortgage not used to acquire or substantially improve the home)
$ 13,800.00
(7) AMTI
$ 846,300.00
Sum (1) through (4)
(8) Full exemption
$ 74,450.00
See exemption amount for MFJ
(9) Phase-out of exemption
$ 74,450.00
[(7) – 150,000] × 25% , not to exceed 74,450
(10) AMT exemption
$ 0.00
(8) – (9)
(11) AMT base
$ 846,300.00
(7) – (10)
(12) AMT Rate
26% and 28%
26% on first $175,000 of AMT base and 28% on AMT base in excess of $175,000
(13) Tentative minimum tax
$ 233,464.00
$175,000 x 26%= $45,500; ($846,300 - $175,000) x 28%= $187,964
(14) Regular tax liability
$ 231,499.50
($749,600 – $388,350) ×35% + 105,062
AMT
$ 1,964.50
(13) – (14)
AMT
Description
Amount
Reference
(1) Regular taxable income
$ 749,600.00
(2) Personal exemptions
$ 19,000.00
3,800 ×5
(3) Real property taxes
$ 15,100.00
(4) State income taxes
$ 41,000.00
(5) Miscellaneous itemized deduction subject to but in excess of 2% AGI floor
$ 7,800.00
(6) Home equity interest expense (mortgage not used to acquire or substantially improve the home)
$ 13,800.00
(7) AMTI
$ 846,300.00
Sum (1) through (4)
(8) Full exemption
$ 74,450.00
See exemption amount for MFJ
(9) Phase-out of exemption
$ 74,450.00
[(7) – 150,000] × 25% , not to exceed 74,450
(10) AMT exemption
$ 0.00
(8) – (9)
(11) AMT base
$ 846,300.00
(7) – (10)
(12) AMT Rate
26% and 28%
26% on first $175,000 of AMT base and 28% on AMT base in excess of $175,000
(13) Tentative minimum tax
$ 233,464.00
$175,000 x 26%= $45,500; ($846,300 - $175,000) x 28%= $187,964
(14) Regular tax liability
$ 231,499.50
($749,600 – $388,350) ×35% + 105,062
AMT
$ 1,964.50
(13) – (14)
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