The AMT exemption for Olga and her husband can be fully claimed at $118,100 for an AMTI of $390,000, reduced to $93,050 for an AMTI of $1,180,000, and is completely phased out for an AMTI of $1,700,000.
The question relates to calculating the Alternative Minimum Tax (AMT) exemption amount based on Alternative Minimum Taxable Income (AMTI) for someone who is married filing jointly. The AMT exemption amount for 2022 starts at $118,100 for married couples filing jointly but is subject to phase-out thresholds depending on the level of AMTI.
Case A: AMTI is $390,000
Since the AMTI is below the phase-out threshold of $1,079,800, the full AMT exemption of $118,100 can be deducted.
Case B: AMTI is $1,180,000
Here the AMTI is above the phase-out start but below the completion level. The AMT exemption must be reduced. The reduction is calculated as 25% of the amount by which AMTI exceeds the phase-out threshold. The precise reduction amount is ($1,180,000 - $1,079,800) × 25% = $25,050.
Therefore, the exemption is $118,100 - $25,050 = $93,050.
Case C: AMTI is $1,700,000
At this income level, the phase-out is complete, and no AMT exemption can be deducted since the AMTI is above $1,552,200.
--The given question is incomplete, the complete question is
"olga is married and files a joint tax return with her husband. what amount of amt exemption may she deduct under each of the following alternative circumstances? a) her amti is $390,000. b) her amti is $1,180,000. c) her amti is $1,700,000.
EXHIBIT 8-5 2022 AMT Exemptions
Filing Status Exemption Phase-Out Begins at This Level of AMTI Phase-Out Complete for This Level of AMTI
Married filing jointly $118,100 $1,079,800 $1,552,200
Married filing separately 59,050 539,900 776,100
Head of household and single 75,900 539,900 843,500."--