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Posted by Ron Hardin on August 26, 2007, 3:00 am
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I hear contradictory things - can capital gains alone
trigger the alternative minimum tax? Or does it take some
other collection of deductions.
(Subquestion, whether cap gains are ever taxed at a higher
rate owing to the alt minimum tax being triggered for
whatever reason.)
--
rhhardin@mindspring.com
On the internet, nobody knows you're a jerk.
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Posted by Phil Marti on August 27, 2007, 2:12 am
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> I hear contradictory things - can capital gains alone
> trigger the alternative minimum tax?
Yes.
> Or does it take some
> other collection of deductions.
>
> (Subquestion, whether cap gains are ever taxed at a higher
> rate owing to the alt minimum tax being triggered for
> whatever reason.)
Long-term cap gains are taxed the same. Other income will
be taxed differently under the AMT rules.
--
Phil Marti
Clarksburg, MD
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Arthur Kamlet on August 27, 2007, 2:12 am
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> I hear contradictory things - can capital gains alone
> trigger the alternative minimum tax? Or does it take some
> other collection of deductions.
Yes, capital gains alone can push you above the present AMT
exemption amount and trigger AMT.
Best way to see this is throw some numbers at some
individual income tax software until the high capital gains
triggers AMT.
> (Subquestion, whether cap gains are ever taxed at a higher
> rate owing to the alt minimum tax being triggered for
> whatever reason.)
Technically, the 15% rate ( or 28% or 25% special gains
rates) is the same for regular income tax and AMT.
But as above, capital gains alone can push you to AMT.
In fact, unless Congress does something for tax year 2007,
lots and lots of people who never expeced to be in AMT
territory will be.
There are special situations where calculation of gain
differs between regular income tax and AMT. Best example is
someone who exercised an ISO and later sells it in a
qualifying disposition. For regular income tax his gain is
calculated with a basis of his exercise price. But his AMT
Schedule D (you have to fill out both a regular income tax
schedule Sch D and also an AMT Sch D) calculates gain using
basis of FMV of the stock on date of exercise.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by KEBSCHULLW on August 29, 2007, 1:31 am
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> I hear contradictory things - can capital gains alone
> trigger the alternative minimum tax? Or does it take some
> other collection of deductions.
>
> (Subquestion, whether cap gains are ever taxed at a higher
> rate owing to the alt minimum tax being triggered for
> whatever reason.)
Yes.
If taxpayers file MFJ and have only regular taxable income
and claims the standard deduction and has two exemptions,
there will be no AMT at any income level.
However, if the taxpayer has both regular taxable income and
capital gains, the taxpayers filing MFJ may have AMT.
Example:
Tax year: 2006
Regular income: $150,000.
Capital gains: 70,000
Total Income: 220,000
Regular tax: $ 37,172
AMT: 615
If taxpayers had $220,000 of only regular income, their
regular tax would $47,005.
Holding the regular income at $150,000 and increasing the
capital gains beyond $70,000 would increase the AMT. As
capital gains approach $300,000 the AMT reaches a maximum of
$11,096.
For $150,000 of regular income and $300,000 of capital gains
the total tax would be $84,000
For comparison, $450,000 of regular income and no capital
gains the tax would be $126,376.
$150,000 was chosen for the regular taxable income in the
above examples because that is the threshold for the start
of the AMT exemption phase-out on a MFJ return. Thus, all
of the phase-out is attributable to the capital gains. The
phase out of the exemption amount produces an effective
capital gains rate of 21.5 or 22 percent. (15 percent plus
25% of either the 26 or 28 percent AMT rate)
Cheers,
WDK
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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