Describe the tax formula for the AMT. Refer to Figure 15.1 in your answer.

FIGURE 15.1

Alternative Minimum Tax (AMT) Formula

Regular taxable income (after add-back of standard deduction and personal or dependency exemptions)

Plus or minus: Adjustments

Plus: Preferences

Equals: Alternative minimum taxable income (AMTI)

Minus: AMT Exemption

Equals: Alternative minimum tax base

Times: 26% or 28% rate

Equals: Tentative minimum tax before credits

Minus: Alternative minimum tax foreign tax credit and other credits

Equals: Tentative minimum tax (TMT)

Minus: Regular tax liability (after foreign tax credit)

Equals: Alternative minimum tax (not less than zero)