Alternative
Minimum Tax (AMT)(p204)

This section briefly discusses an additional tax you may have to pay.

The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from this special treatment may have to pay at least a minimum amount of tax through an additional tax called AMT.

You may have to pay the AMT if your taxable income for regular tax purposes, combined with certain adjustments and tax preference items, is more than a certain amount. See Form 6251, Alternative Minimum Tax — Individuals.

The more common adjustments and tax preference items include:

• Addition of personal exemptions,
• Addition of the standard deduction (if claimed),
• Addition of itemized deductions claimed for state and local taxes, certain interest, most miscellaneous deductions, and part of medical expenses,
• Subtraction of any refund of state and local taxes included in gross income,
• Changes to accelerated depreciation of certain property,
• Difference between gain or loss on the sale of property reported for regular tax purposes and AMT purposes,
• Addition of certain income from incentive stock options,
• Change in certain passive activity loss deductions,
• Addition of certain depletion that is more than the adjusted basis of the property,
• Addition of part of the deduction for certain intangible drilling costs, and
• Addition of tax-exempt interest on certain private activity bonds.

For more information about the AMT, see the instructions for Form 1040, line 45, and Form 6251.