Question

The AMT is separate from, but parallel to, the regular income tax system.

a) True
b) False

Answer 1

The AMT is indeed separate from but parallel to the regular income tax system, serving as a minimum tax threshold that some taxpayers are required to meet.

Step-by-step explanation:

The statement that the AMT is separate from, but parallel to, the regular income tax system is true. The Alternative Minimum Tax (AMT) was created to ensure that individuals who receive certain tax benefits pay at least a minimum amount of tax. It operates alongside the regular income tax system and requires some taxpayers to calculate their liability twice—once under the regular income tax rules and once under the AMT rules—and then pay the higher amount. The AMT has its own set of rules and exemptions, which are distinct from the regular tax system.