Question

"Betty is age 34 and has AGI of $50,000 and regular taxable income of $35,000. The following items may qualify as itemized deductions for Betty:

Qualified medical expenses (before percentage of AGI floor)$3,000
Real estate tax$1,200
State income tax$800
Charitable contributions$600
Mortgage interest on acquisition indebtedness$2,000
Home equity interest on a loan used to improve the home$300
What is the alternative minimum taxable income (AMTI)?"

Answer 1

The alternative minimum taxable income (AMTI) for Betty is $42,900.

Step-by-step explanation:

The alternative minimum taxable income (AMTI) is calculated by starting with Betty's regular taxable income, which is $35,000. Then, we add back specific deductions that were disallowed under the alternative minimum tax rules:

• Qualified medical expenses: $3,000
• Real estate tax: $1,200
• State income tax: $800
• Charitable contributions: $600
• Mortgage interest on acquisition indebtedness: $2,000
• Home equity interest on a loan used to improve the home: $300

Adding these deductions back to the regular taxable income gives us the alternative minimum taxable income (AMTI). In this case, the AMTI would be:

AMTI = $35,000 + $3,000 + $1,200 + $800 + $600 + $2,000 + $300 = $42,900