Problem 12-49 (LO. 2, 3, 4, 5)

Pat is 40, is single, and has no dependents. She received a salary of $390,000 in 2019. She earned interest income of $11,000, dividend income of $15,000, gambling winnings of $14,000, and interest income from private activity bonds (issued in 2015) of $40,000. The dividends are not qualified dividends. The following additional information is relevant.

State income taxes	$8,100
Real estate taxes	4,000
Mortgage interest on residence	13,100
Investment interest expense	3,800
Gambling losses	5,100

a. Compute Pat's taxable income and AMTI.

Taxable Income Computation
Adjusted gross income	$
Itemized deductions
Taxable income	$
AMTI Computation
Taxable income	$
Add: itemized deductions adjustments
Add: income tax preference items
AMTI	$

Feedback

The purpose of the AMT formula is to reconcile taxable income to AMTI. The reconciliation of taxable income to AMTI is accomplished by entering reconciling items to account for differences between regular income tax provisions and AMT provisions. These reconciling items are referred to as AMT adjustments or tax preferences.

b. Compute Pat's tentative minimum tax.

Computation of AMT Base and Tax
AMTI	$
AMT exemption
AMT base	$
Tentative AMT	$