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February 2010 » The 2009 AMT Stimulus Patch
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Avril K. George-Robinson, MA, CPA, and Paul S. Cox, MS, CPA
The Alternative Minimum Tax (AMT) was enacted because of congressional reaction to the 1969 Economic Report of the President, which indicated that 155 high-income taxpayers with adjusted gross incomes above $200,000 did not pay any federal income tax. The AMT is a separate and parallel tax system that effectively requires individual taxpayers to compute their regular income tax liability, then recompute their tax liability under the AMT system and pay whichever is greater. Most income and expense items (e.g., a taxpayer's wages and charitable contributions) are treated the same way for both regular taxable income and alternative minimum taxable income (AMTI). There are some income and expense items that are treated differently, however. For example, the deductions for property taxes and state and local taxes are allowed for regular income tax purposes but disallowed for AMT purposes. While items are sometimes treated the same way for both regular and AMT purposes, the amounts (e.g., passive activity losses) may be different because of timing issues and differences in methods used.
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