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Author: alglen One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120820  
Subject: alt minimum tax eligibility Date: 2/2/1999 11:40 PM
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Greetings,

I read recently that middle income folks are more and more being hit with the alt. minimum tax.

What are the requirements that forces one to fall into this catagory?

thanks
ag
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Author: WilliamLipp Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9424 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/3/1999 12:20 AM
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alglen Date: 2/2/99 11:40 PM Number: 9422
I read recently that middle income folks are more and more being hit with the alt. minimum tax. What are the requirements that forces one to fall into this catagory?

IMHO, there has been much irresponsible fear mongering on this topic recently. The only way that you are likely to hit this is if you work for a startup company that give stock options.

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Author: mathetes Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9443 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/3/1999 1:46 PM
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alglen Date: 2/2/99 11:40 PM Number: 9422
I read recently that middle income folks are more and more being hit with the alt. minimum tax. What are the requirements that forces one to fall into this catagory?


WilliamLipp responded IMHO, there has been much irresponsible fear mongering on this topic recently. The only way that you are likely to hit this is if you work for a startup company that give stock options.

As one who doesn't work for a startup company, but who was hit badly (blindsided) by AMT a few years ago because of irresponsible "Don't worry about it" advice, I've learned enough to warn people appropriately. Mr Lipp is correct, that there's been a certain amount of fear mongering; the other side is very real too -- that there's a lot of discounting of a very real tax that can have very real impact on very ordinary people.

Mr Lipp is also correct in connecting it with Stock Options. More specifically, the type of Stock Option known as an Incentive Stock Option (as opposed to the Non-Qualified Option). I happen to work for a Fortune 50 corporation (hardly a startup, well over 100 years old) that gives all employees options, most of them ISOs (top execs also get NQs because there's a legal limit on how much ISO any one person can get in one year)....

It's not the getting of the Option that exposes you to AMT. It's the exercising of that option in what is commonly called a "buy-hold" transaction. If you do a "buy-sell" you basically convert to cash whatever the difference is between the option price and the current market price; that cash amount is immediately taxable as ordinary income.

Doing a buy-hold, on the other hand, exposes you to one type of what the AMT system calls "preference item income" -- in this case the difference between the current market value of the stock you've purchases and the price you paid. Your actual net worth has gone up by that amount, even though you've not received it in any immediately liquid form (i.e., it's not cash yet).

The IRS allows (based on filing status, income levels, etc) somewhere in the neighborhood of $35,000 to $40,000 of preference item income BEFORE AMT kicks in. So long as your ISO buy-hold doesn't benefit you by more than that amount, you're probably OK.

HOWEVER, and it's a huge however: some of the other common preference items are state and local income tax deductions, real estate tax deductions. Those count as deductions in normal tax calculations; for AMT purposes you back those out. They count against you, as they are added into the total allowable preference item income.

It is not uncommon, therefore, for people to incur AMT liability for merely exercising an ISO option, buying it and holding the resulting shares, despite the fact that they may even have borrowed money in order to buy the stock. The first time it happened to me, I found myself having to borrow still more money to pay the AMT that I'd been told was "not something to worry about."

One reason people say "don't worry about it" is this: once paid, the AMT you've paid works as a credit if and when, in future years, you do end up selling those shares. In effect, it's as if you've prepaid the long term capital gains tax. That's not legally what it is, but is can be best understood by those of us who are tax laymen in those terms.

So I don't believe in unduly alarming people; nor do I believe in encouraging the ostrich approach to it. AMT is real and it can indeed bite you. If you want to read more, go to http://www.fairmark.com for a great, understandable presentation by a tax lawyer.

mathetes

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Author: WilliamLipp Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9447 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/3/1999 4:50 PM
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WilliamLipp
IMHO, there has been much irresponsible fear mongering on this topic recently. The only way that you are likely to hit this is if you work for a startup company that gives stock options.

mathetes Date: 2/3/99 1:46 PM Number: 9443
As one who doesn't work for a startup company, but who was hit badly (blindsided) by AMT

An excellent and informative post. I hereby retract the inappropriate word "startup," expand "stock options" to the more particular "incentive stock option," and recommend post 9443 for anyone who does work for for company that gives incentive stock options.


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Author: bobblaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9461 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/3/1999 7:05 PM
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A common scenario, especially to those who invest foolishly, would be for someone to sell his underperforming mutual fund that has been the mainstay of his portfolio for a good number of years, thinking that the 20% capital gains tax would be more than offset by the gains in more foolish investments. Much to his chagrin, he discovers that the AMT now kicks in and not only does his tax rate increase but he loses both itemized deductions and personal exemptions as well. A solution to this problem would be to divest the mutual fund portfolio over two or more years, using Turbo Tax or similar software to determine how much to sell to stay just under the AMT.

Bob

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9541 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 11:40 AM
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[[I read recently that middle income folks are more and more being hit with the alt.
minimum tax.

What are the requirements that forces one to fall into this catagory?]]

You want it...you got it. But I would suggest that you go over to the IRS web site and download IRS Form 6251 and the instructions for greater detail.

The tax laws give special treatment to certain types of income, deductions, and credits. The AMT is designed to make sure that the taxpayers who benefit from these laws share some part of the federal tax burden. The AMT is payable to the extent it exceeds your regular tax liability.

The AMT rate is 26% or 28%, depending on the amount that is subject to tax. The taxable amount is the amount by which your "alternative minimum taxable income" exceeds your exemption amount. The exemption amounts are $45,000 for joint returns; $33,750 for single returns; and $22,500 for married filing separately. Note, however, that the exemption amount is phased out at the rate of 25 cents for every dollar of taxable income in excess of $112,500 for single individuals, $150,000 for married couples, and $75,000 for married taxpayers filing separately.

The first step in determining your AMT liability is to compute your "alternative minimum taxable income" (AMTI). To do this, start with "taxable income" from Form 1040, then make certain changes to eliminate the tax advantages resulting from the items that received special treatment. Here is a summary of the major changes:

Personal Exemption; Standard Deduction; Itemized Deductions: Personal exemptions and standard deductions claimed in computing your regular tax must be added to taxable income. For itemized deductions, you must add back to taxable income all deductions that were subject to the 2% floor. In addition, the overall limitation on itemized deductions does not apply in determining AMTI. You also must make the following modifications:

1. Medical Expenses: You can deduct medical expenses that exceed 10% of your adjusted gross income (AGI). Since for regular tax purposes, you can deduct such expenses that exceed 7.5% of AGI, add back the lesser of 2.5% of AGI or the amount you deducted for regular tax purposes.

2. Taxes: Add back amounts deducted for state, local or foreign income taxes; real property taxes; and state and local personal property taxes.

3. Home Mortgage Interest: Home mortgage interest is generally deductible for AMT purposes. Interest on mortgages can be deducted only if the debt is for acquiring, constructing, or substantially improving a residence. Interest on refinances taken out after June 30, 1982, is not deductible to the extent it is attributable to debt that exceeds the amount of the original mortgage.

4. Investment Interest: Investment interest expenses are deductible only to the extent of investment interest income (including tax-exempt interest on private activity bonds).

5. Accelerated Depreciation: Accelerated depreciation taken for property placed in service before 1987, i.e., the amount by which the deduction exceeds what would have been allowable under the straight-line method, must be added back. For property placed in service after 1986, or for property that is otherwise subject to the modified accelerated cost recovery system (MACRS), the deduction is computed using the alternate method under MACRS.

Note that, since the AMT depreciation deduction differs from the amount allowable for regular tax purposes, taxpayers who have AMT liability will have a different basis in the property for AMT purposes than for regular tax purposes. This means that the amount of gain or loss on sale or other disposition will be different for AMT purposes.

Also, note that deductions for amortization of pollution control facilities are determined under the alternate MACRS rules.

6. Circulation Costs: These costs must be amortized over a three-year period.

7. Research & Experimental Expenditures; Mining Exploration & Development Costs: These costs generally must be amortized over ten years. Thus, the AMT adjustment is the difference between the amount deducted for regular tax purposes and the re-computed figure. If you materially participated in the activity, such expenses may be expensed and deducted currently.

8. Long-term Contracts: For long-term contracts entered into after 2/28/86, income must be computed using the percentage of completion method, except in the case of certain "home construction" contracts.

9. Installment Sales by Dealers: The installment method cannot be used by dealers on sales of inventory or stock in trade. Thus, all gain must be recognized in the year of sale.

10. Tax Shelter Farm Losses: Losses from tax shelter farm activities are not allowed in computing AMT liability. Such losses are allowed in later years to offset income from that activity or to offset gain on a disposition of your entire interest in the property.

11. Passive Losses: Passive losses must be recomputed using the AMT adjustments and preferences rather than those applicable for the regular income tax. The AMT adjustment is the difference between the figure reported on Form 1040 and the recomputed amount.

12. Incentive Stock Options: If the fair market value of stock (at the date of grant) was more than the price you paid, the difference is a tax preference and must be added to taxable income in computing AMTI.

After making the above adjustments to taxable income, add your tax preference items back to taxable income. These items include:
• excess intangible drilling and development costs;
• bad debt reserves of financial institutions (prior to 1996);
• tax-exempt interest on bonds issued after August 7, 1986;
• accelerated depreciation on pre-1981 real property;
• accelerated depreciation on pre-1981 leased personal property;
• accelerated depreciation on property placed in service after 1980 and before 1987 (ACRS Property);
• amortization of pollution control facilities placed in service before 1987; and
• one-half the amount excluded from gross income on the sale of "qualified small business stock."

Next, subtract your exemption amount to obtain the taxable amount. Multiplying up to $175,000 by 26% and any amount in excess of $175,000 by 28% yields your tentative AMT liability (payable to the extent it exceeds your regular tax).

Note that there are other AMT rules that might apply in certain situations. For example, if you have a net operating loss, that loss must be computed differently for AMT purposes than for regular tax purposes. Likewise, if you paid foreign income taxes, or AMT in a prior year, you may be eligible for a credit against current AMT liability.

This should scare the crap out of you...if you are still reading...

TMF Taxes
Roy


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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9543 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 11:44 AM
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[[IMHO, there has been much irresponsible fear mongering on this topic recently.
The only way that you are likely to hit this is if you work for a startup company
that give stock options.]]

In general, I agree with you William. There has been a lot of "scare tactics" (otherwise known as yellow journalism...IMHO) on the AMT issues.

But don't also forget that two other kickers in the AMT is the state tax deduction and excess miscellaneous itemized deductions.

We WOULD have had a big problem with the AMT this year if the child credits and the education credits would have been applicable for regular tax purposes only...as it was originally written. But the Congress finally wised up and make the credits available for both regular and AMT purposes...but only for 1998.

So this problem may still loom in the future...but I'm guessing that the Congress will extend the legislation to allow for the credit for both the regular tax and AMT for future years.

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9563 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 1:23 PM
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[[A common scenario, especially to those who invest foolishly, would be for
someone to sell his underperforming mutual fund that has been the mainstay of
his portfolio for a good number of years, thinking that the 20% capital gains tax
would be more than offset by the gains in more foolish investments. Much to his
chagrin, he discovers that the AMT now kicks in and not only does his tax rate
increase but he loses both itemized deductions and personal exemptions as well.]]

Sorry, Bob...but I'm not sure that I follow this one. Remember that the long term capital gains rates apply BOTH for regular tax and AMT purposes. So you won't have an AMT problem just because of the capital gains. But it may be a contributing factor, and certainly MAY reduce your exemptions and itemized deductions as you point out.

If I'm reading this incorrectly, I apologize. But it seems to imply that the AMT will hit you on your capital gains per se. And tht is not technically correct.

Sorry...just wanted to make sure that we are both on the same page and verse on this issue.

TMF Taxes
Roy

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Author: alglen One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9576 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 2:10 PM
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Roy and Bob,

Here is where we hit the nail on the head or not. I originally asked about it because I am currently becoming more foolish by seriously considering divesting mutual funds and investing that money.

My estimate for 1999 is about $50k earned income, and another 50 to 70 k capital gain, most of it long term from dumping the mutual funds.

I have only the std deduction (military, thus no home and no state taxes). However, 4 kids in 1999 is a nice tax credit, if it will apply.

My read from all the posts is that I should be okay and not fret the AMT ...
Is that right?? ?? ??

thanks for your help in the matter
ag

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Author: bobblaw One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9592 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 5:48 PM
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Ag, with those numbers you should have no problem. However I disagree with Roy, although most reluctantly. The AMT happens to apply to me in a one-time situation. We sold a fully depreciated office building which resulted in a capital gain to me of around 214K. My regular gross income is 91K. I ran the figures very carefully through Turbo Tax and was forced to use the standard deduction for married filing jointly, only got $216 as personal exemptions and then was hit with an AMT of $4321. Roy, can you shed some light upon this?.

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9618 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 10:25 PM
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[[

Here is where we hit the nail on the head or not. I originally asked about it
because I am currently becoming more foolish by seriously considering divesting
mutual funds and investing that money.

My estimate for 1999 is about $50k earned income, and another 50 to 70 k
capital gain, most of it long term from dumping the mutual funds.

I have only the std deduction (military, thus no home and no state taxes).
However, 4 kids in 1999 is a nice tax credit, if it will apply.

My read from all the posts is that I should be okay and not fret the AMT ...
Is that right?? ?? ??]]

If this is it, you should have no problems with the AMT at all.

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9625 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 11:08 PM
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[[Ag, with those numbers you should have no problem. However I disagree with
Roy, although most reluctantly.]]

Don't be reluctant about it Bob. In this case you are entirely correct.

[[ The AMT happens to apply to me in a one-time
situation. We sold a fully depreciated office building which resulted in a capital
gain to me of around 214K. My regular gross income is 91K. I ran the figures
very carefully through Turbo Tax and was forced to use the standard deduction
for married filing jointly, only got $216 as personal exemptions and then was hit
with an AMT of $4321. Roy, can you shed some light upon this?.]]

It sounds about right. Without running the return, I'm GUESSING that if you look at page 2 of Form 6251, you'll find that you get to use your gain from the sale for both regular AND AMT purposes. What happens is that you lose the benefit of your 15% bracket because of the size of your income. That is why you get hit with the AMT. It's because of the gain indirectly...not directly. If that makes any sense.

There is no question that your exemptions are going to get hacked. But that is not because of the AMT.

But there is no question that with this type of circumstance, the AMT WILL apply to you (as you have sadly found out).

But one thing that I would like to also point out: With this type of income, you fall into the top 60% of the top 5% of all taxpayers. (at least for the date available). So while the AMT will impact YOU, and all of the other people that don't have anything "special" in their tax returns (other than large gains), it is difficult for me to reconcile 5% of the taxpaying public with "many people" as some of the articles seem to imply.

Hey...I'm with all of you that say the AMT stinks, and can sneak up on you if you are not careful. But for the vast majority of the taxpaying public, at least 90% of the taxpaying public, the AMT might as well not exist.

But those of us in the 10% get it stuck in us. No question about it. So that is why I'm trying to temper the "sky is falling with the AMT" issues with the majority of the population. If this was a message folder where you had to Incentive stock options and/or $500k in AGI before you got to post, the tenor of the discussion would change substantially...and we would be talking about the AMT every day.

But I don't know if the demographics of this folder would warrent such extensive discussions. Maybe you can tell me. I'll go with whatever the reader is most interested in.

TMF Taxes
Roy

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Author: JABoa Big gold star, 5000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9627 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/5/1999 11:48 PM
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How about someone who is waiting for the hole in his shoe to get big enough that it makes it worthwhile to visit the cobbler?

Honest, I think that first you are drawing from a population that has access to a computer and knows about the Fool. This must eliminate almost half of everybody. Then you've got several categories, depending on laziness, ignorance, and special circumstances. Typical questions I have seen: "I am self-employed, do I have to pay taxes?" "You mean to tell me I as a landlord can't deduct the new floor in 1 year?" (That one hit fairly close to home. In fact, that one hit home.) "I have a complicated foreign residence situation and..."

TMFTaxes, I think of you as a volunteer teacher, even if the Fool pays you, and I hope they do, and handsomely. The ignorant should be steered to the right place; the complicated can afford to get professional advice. That leaves the people in the middle, who are always the group you have to teach to. JMHO.

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9640 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/6/1999 1:45 PM
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[[ TMFTaxes, I think of you as a volunteer teacher, even if the Fool pays you, and
I hope they do, and handsomely. The ignorant should be steered to the right
place; the complicated can afford to get professional advice. That leaves the
people in the middle, who are always the group you have to teach to. JMHO.]]

I couldn't agree more, JAB. This is also how I view my participation here in the folders.

This is very, very well said. No way I could have said it any better myself. You found the essence of the situation in just a few short sentences.

I'm here to try and teach as many as possible. Young or old. Rich or poor. Fat or thin. I try to provide basic information and direction...perhaps some reference to help with the problem. This folder never was, and never will be (as long as I'm here) a forum to use to complete a specific line on YOUR specific tax return. That is for you to complete. (and remember that I'm using the editorial "you" here...not just you JAB)

So I'll keep doing the best that I can, trying to discuss issues that I think might have the greatest impact to the most people, and try to lead folks in the right direction. I'll make mistakes...both in omission and comission, but I'll keep on pluggin away and try to give all of the readers in this folder something to take with them, good or bad, right or wrong.

Thanks for the help in defining my role, JAB. I think that you know it better than I do. :-)

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9641 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/6/1999 1:45 PM
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[[ TMFTaxes, I think of you as a volunteer teacher, even if the Fool pays you, and
I hope they do, and handsomely. The ignorant should be steered to the right
place; the complicated can afford to get professional advice. That leaves the
people in the middle, who are always the group you have to teach to. JMHO.]]

I couldn't agree more, JAB. This is also how I view my participation here in the folders.

This is very, very well said. No way I could have said it any better myself. You found the essence of the situation in just a few short sentences.

I'm here to try and teach as many as possible. Young or old. Rich or poor. Fat or thin. I try to provide basic information and direction...perhaps some reference to help with the problem. This folder never was, and never will be (as long as I'm here) a forum to use to complete a specific line on YOUR specific tax return. That is for you to complete. (and remember that I'm using the editorial "you" here...not just you JAB)

So I'll keep doing the best that I can, trying to discuss issues that I think might have the greatest impact to the most people, and try to lead folks in the right direction. I'll make mistakes...both in omission and comission, but I'll keep on pluggin away and try to give all of the readers in this folder something to take with them, good or bad, right or wrong.

Thanks for the help in defining my role, JAB. I think that you know it better than I do. :-)

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9642 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/6/1999 1:45 PM
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[[ TMFTaxes, I think of you as a volunteer teacher, even if the Fool pays you, and
I hope they do, and handsomely. The ignorant should be steered to the right
place; the complicated can afford to get professional advice. That leaves the
people in the middle, who are always the group you have to teach to. JMHO.]]

I couldn't agree more, JAB. This is also how I view my participation here in the folders.

This is very, very well said. No way I could have said it any better myself. You found the essence of the situation in just a few short sentences.

I'm here to try and teach as many as possible. Young or old. Rich or poor. Fat or thin. I try to provide basic information and direction...perhaps some reference to help with the problem. This folder never was, and never will be (as long as I'm here) a forum to use to complete a specific line on YOUR specific tax return. That is for you to complete. (and remember that I'm using the editorial "you" here...not just you JAB)

So I'll keep doing the best that I can, trying to discuss issues that I think might have the greatest impact to the most people, and try to lead folks in the right direction. I'll make mistakes...both in omission and comission, but I'll keep on pluggin away and try to give all of the readers in this folder something to take with them, good or bad, right or wrong.

Thanks for the help in defining my role, JAB. I think that you know it better than I do. :-)

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9643 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/6/1999 1:46 PM
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[[ TMFTaxes, I think of you as a volunteer teacher, even if the Fool pays you, and
I hope they do, and handsomely. The ignorant should be steered to the right
place; the complicated can afford to get professional advice. That leaves the
people in the middle, who are always the group you have to teach to. JMHO.]]

I couldn't agree more, JAB. This is also how I view my participation here in the folders.

This is very, very well said. No way I could have said it any better myself. You found the essence of the situation in just a few short sentences.

I'm here to try and teach as many as possible. Young or old. Rich or poor. Fat or thin. I try to provide basic information and direction...perhaps some reference to help with the problem. This folder never was, and never will be (as long as I'm here) a forum to use to complete a specific line on YOUR specific tax return. That is for you to complete. (and remember that I'm using the editorial "you" here...not just you JAB)

So I'll keep doing the best that I can, trying to discuss issues that I think might have the greatest impact to the most people, and try to lead folks in the right direction. I'll make mistakes...both in omission and comission, but I'll keep on pluggin away and try to give all of the readers in this folder something to take with them, good or bad, right or wrong.

Thanks for the help in defining my role, JAB. I think that you know it better than I do. :-)

TMF Taxes
Roy

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9644 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/6/1999 1:46 PM
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[[ TMFTaxes, I think of you as a volunteer teacher, even if the Fool pays you, and
I hope they do, and handsomely. The ignorant should be steered to the right
place; the complicated can afford to get professional advice. That leaves the
people in the middle, who are always the group you have to teach to. JMHO.]]

I couldn't agree more, JAB. This is also how I view my participation here in the folders.

This is very, very well said. No way I could have said it any better myself. You found the essence of the situation in just a few short sentences.

I'm here to try and teach as many as possible. Young or old. Rich or poor. Fat or thin. I try to provide basic information and direction...perhaps some reference to help with the problem. This folder never was, and never will be (as long as I'm here) a forum to use to complete a specific line on YOUR specific tax return. That is for you to complete. (and remember that I'm using the editorial "you" here...not just you JAB)

So I'll keep doing the best that I can, trying to discuss issues that I think might have the greatest impact to the most people, and try to lead folks in the right direction. I'll make mistakes...both in omission and comission, but I'll keep on pluggin away and try to give all of the readers in this folder something to take with them, good or bad, right or wrong.

Thanks for the help in defining my role, JAB. I think that you know it better than I do. :-)

TMF Taxes
Roy

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Author: JABoa Big gold star, 5000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9650 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/6/1999 4:10 PM
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Gosh, TMFTaxes, your compliment to me shows up 5 times. (Must have been trouble with the connection.) I have been discussing with SmrtAss the trouble I have with compliments, both giving and getting. I'll accept one this one time, but that's it.

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Author: shess Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9795 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/9/1999 12:43 AM
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TMFTaxes wrote:
<<Hey...I'm with all of you that say the AMT stinks, and can sneak up on you if you are not careful. But for the vast majority of the taxpaying public, at least 90% of the taxpaying public, the AMT might as well not exist.>>

The problem with this statement is that the AMT isn't something that there's a line on the tax forms that says "If this amount is above that amount, you're going to have to pay AMT." Instead, the AMT is an entire seperate system of taxation that just happens to share many common points with non-AMT taxation. The taxpayer is responsible for running the numbers both ways, and paying the larger of the two. There are no income limitations or tax payment limitations involved. In theory, you could pay AMT if you only had a few tens of thousands in income, or if you had a high income and paid 50% or more in taxes. [In _practice_ this is very unlikely, of course - but if you don't run the numbers, the IRS certainly will, and send you any necessary bills for the AMT and penalties...]

So, while only very few people might actually _pay_ AMT, substantially more people have to concern themselves with AMT. H&R Block has to love things like the AMT, pretty much a license for them to print money...

[It would seem that Congress could relatively easily effect the same goal as the AMT by simply adding something to the tax code like "If your total income exceeded this amount, and your total tax payments were less than this ratio of your total income, do the AMT calculations." Then it would be relatively easy to see whether you need to worry about AMT or not.]

Later,
scott


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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9867 of 120820
Subject: Re: alt minimum tax eligibility Date: 2/10/1999 9:03 PM
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[[Gosh, TMFTaxes, your compliment to me shows up 5 times. (Must have been
trouble with the connection.) ]]

Either that...or it was a precursor of my laptop crashing.

My desktop computer crashed on Sunday, and my laptop crashed on Monday. That is why I'm so far behind in my posting. I finally got my desktop fixed and re-loaded today. My laptop tomorrow (I hope).

It was a real mess.

But you DO deserve the compliments, JAB...each and every one of 'em.

TMF Taxes
Roy

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