Question

The alternative minimum tax base is typically ______ the regular income tax base.

A) smaller than
B) about the same as
C) larger than
D) exactly the same as

Answer 1

The alternative minimum tax base is typically smaller than the regular income tax base.

Step-by-step explanation:

The alternative minimum tax base is typically smaller than the regular income tax base.

The alternative minimum tax (AMT) is a separate tax system that is designed to ensure that wealthy individuals and corporations pay a minimum amount of tax, regardless of deductions and credits. The AMT base starts with the regular income tax base and makes adjustments to certain deductions and exemptions. These adjustments are added to the regular tax base to determine the AMT base, which is typically smaller than the regular income tax base.

For example, if an individual has a regular income tax base of $100,000 and the AMT adjustments amount to $10,000, the AMT base would be $110,000. In this case, the AMT base is larger than the regular income tax base.