Alternative Minimum Tax
In Chapter 2, we described the alternative minimum tax (AMT), a tax calculation meant to prevent individuals with high incomes from abusing the use of tax deductions to reduce or eliminate their taxable income. Taxpayers must pay the AMT, if it exceeds their regular income tax calculation for the year.
For investors in equipment leasing programs, certain depreciation and interest expenses are not deducted from gross income under the AMT calculation. For example, a company that uses a 200% declining balance method to calculate accelerated depreciation may deduct the full amount of depreciation expense using the regular method of taxation. For the AMT calc