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
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%.
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.
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