AMT Tax Preference Items
The alternative minimum tax (AMT) is a mandatory income tax calculation that is weighed against the standard calculation to ensure a minimum tax payment. It was created to close tax loopholes by setting a floor on the income tax liability of well-to-do taxpayers. The AMT is often called a “parallel” tax system, since it is not truly an alternative, optional way of calculating income taxes. Instead, taxpayers are required to calculate their alternative minimum taxable income (AMTI) and pay the tax on this amount if it is greater than what they owe under the regular income tax calculation.
Where individuals ordinarily subtract a multitude of credits and deductions from gross income to find their taxable income, the AMT does not allow many of these deductions. It does not deduct state or local income taxes or property taxes, for example. A tax break that is not deductible for calculating the AMT is calle
