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Posted by raylopez99 on January 16, 2008, 5:44 pm
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AMT question: What is the AMT on these facts?
House sold after being held for 30+ years, bought for almost nothing,
investment property, long term capital gains was $2 m (million),
assume negligible improvements made to the house.
Taxpayer has no other income except this sale for 2007. No carryover
losses of any kind to offset from this gain.
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Posted by Rich Carreiro on January 16, 2008, 6:36 pm
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> AMT question: What is the AMT on these facts?
>
> House sold after being held for 30+ years, bought for almost nothing,
> investment property, long term capital gains was $2 m (million),
> assume negligible improvements made to the house.
>
> Taxpayer has no other income except this sale for 2007. No carryover
> losses of any kind to offset from this gain.
Also assuming single and taking the standard deduction, AMT
ends up at around $1,168.
Remember, LTCG are taxed at the same nominal rate under the
regular system and the AMT system. It's the trip through
the AMT exemption phaseout zone that put a temporary higher
marginal rate on LTCG under AMT. Once the exemption is fully
phased out, the AMT marginal rate on LTCG drops back to the
15% nominal one.
--
Rich Carreiro rlc-news@rlcarr.com
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by raylopez99 on January 17, 2008, 12:59 pm
Please log in for more thread options > Also assuming single and taking the standard deduction, AMT
> ends up at around $1,168.
>
> Remember, LTCG are taxed at the same nominal rate under the
> regular system and the AMT system. It's the trip through
> the AMT exemption phaseout zone that put a temporary higher
> marginal rate on LTCG under AMT. Once the exemption is fully
> phased out, the AMT marginal rate on LTCG drops back to the
> 15% nominal one.
>
Thanks Rich Carreiro. I found H&R Block online has an AMT calculator
for 2007, and indeed, if you run these numbers, you get a regular tax
of $295648 (about 14.78% of the 2 million) and an AMT of $1168, for a
total tax of $296816, or 14.84%.
RL
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by ed on January 17, 2008, 1:38 pm
Please log in for more thread options > AMT question: What is the AMT on these facts?
>
> House sold after being held for 30+ years, bought for almost nothing,
> investment property, long term capital gains was $2 m (million),
> assume negligible improvements made to the house.
>
> Taxpayer has no other income except this sale for 2007. No carryover
> losses of any kind to offset from this gain.
>
Actually, the AMT portion of his total tax is $973 which is not
affected by passing through the phaseout of his AMT Exemption because
at his income level there is no Exemption. It's allready completely
phased out. His total tax is his Tenative Minimum Tax of 15% of the
$2 million, minus $3,185 (due to the reduced 5% tax rate on the first
$31,850) or $300,000 minus 3,185 = $296,815. This figure is constant
regardless of AMT Exemption or his filing status, and would be
$1,592.50 less in 2008 due to the 0% bracket.
His Regular Tax would be this same amount, but reduced by 15% of his
Standard Deduction of $5,350 and phased out Exemption of 1,133, or
$972.45. This is the AMT amount on line 45 of 1040. His Regular tax
of $295,843 would vary depending on his tax status, number of
exemptions, different year's tax rates, etc. making his AMT different,
but total tax the same.
ed
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
> << >>
> << The Charter and the Guidelines for submitting posts >>
> << to this newsgroup as well as our anti-spamming policy >>
> << are atwww.asktax.org. >>
> << Copyright (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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