Question

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? Exhibit 8-5.

Note: Leave no answer blank. Enter zero if applicable.

Required:

a. Her AMTI is $390,000.
b. Her AMTI is $1,180,000.
c. Her AMTI is $1,600,000.

Answer 1

Olga's AMT exemption may differ based on her AMTI. Below the phase-out threshold, she can deduct the full AMT exemption. At $390,000, she'd likely get the full exemption, at $1,180,000 the exemption would phase out, and at $1,600,000 she'd probably receive no exemption. Exact amounts depend on the tax year thresholds.

Step-by-step explanation:

The question revolves around the Alternative Minimum Tax (AMT) and how it's calculated for Olga, who is married and files a joint tax return with her husband. The AMT exemption amount depends on the Alternative Minimum Taxable Income (AMTI). Without the actual exemption amount and phase-out thresholds for the relevant year, we can approach the question conceptually.

As a general rule:

• If Olga's AMTI is below the phase-out threshold, she would be able to deduct the full AMT exemption amount.
• If her AMTI is within the phase-out range, the exemption amount begins to decrease.
• Once her AMTI exceeds the phase-out range, no AMT exemption can be deducted.

For the specific values provided:

1. $390,000: Here Olga's exemption would likely be the full amount before any phase-out.
2. $1,180,000: At this level, Olga's exemption amount would be reduced because it falls within the common phase-out ranges for joint filers.
3. $1,600,000: With an AMTI of $1,600,000, Olga likely would not be eligible for an AMT exemption as her income exceeds typical phase-out ranges for joint filers.

Please note that specific numbers vary by tax year and should be confirmed with the current IRS tax guidelines and thresholds.