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.)
-- snipped-for-privacy@mindspring.com
On the internet, nobody knows you're a jerk.
Yes.
Long-term cap gains are taxed the same. Other income will be taxed differently under the AMT rules.
-- Phil Marti Clarksburg, MD
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.
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
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
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.