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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Just a quick question to verify that I am calculating regular

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Just a quick question to verify that I am calculating regular tax and AMT correctly.

For regular federal tax purposes, consider that my taxable income after deductions and personal exemptions is $480000. Assuming no tax credits, what would the regular income tax be?

For AMT purposes, my adjusted gross income is $500000. Use $45,000 as the exemption amount. What is the total tax due under AMT?
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RD :

What year is the calculation for? What is your filing status?

Customer :

2010 but 2009 would be OK.

Customer :

My filing status is married filing jointly.

RD :

Based on the information you provided, the AMT exemption should be 0 as it would get phased out

RD :

If I take $45000 as the exemption amount than your regular tax is higher than the alternative minimum tax. Hence, you are not subject to AMT

RD :

Even if I were to take 0 AMT exemption, the regular tax is higher than the alternative minimum tax. Hence, you will not be subject to AMT

RD :

Based on 2009 tax rates, your federal regular tax is $138,362

RD :

and your AMT tax (with $45K exemption) is $123,900 and AMT tax (with $0 exemption) is $136,500

Customer :

Thank you for your input. You have confirmed that I have calculated the tax correctly. One point of clarification: The exemption amount is not an option since the standard exemption amount of $45,000 is reduced according to a formula based on the AGI. At 500,000 the exemption is reduced to 0. I do find it an interesting quirk of the AMT that the tax due at the higher amounts reverts to the regular tax at the higher levels of income.

RD and 2 other Tax Specialists are ready to help you
The AMT exemption amount for 2009 is $70950. However, it phases out if the AMT income is over $150K. If your AMT income is above this threshold amount, the amount of your AMT exemption is lowered by $0.25 for ever $1 your AMT income is over this amount. For example, if you are single and your AMT income is $115,000, that is $2,500 over the threshold amount, so your exemption would be lowered by $625.So if you income is too high, the exemption is zero.

Since the highest tax rate for AMT purposes is 28% but for Regular tax purposes is 35%, at higher income levels, there is no AMT tax as it would be lower compared to regular tax.