UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next
Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Re: AMT and Tax-free bonds Date: 5/25/2011 10:12 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Alternative tax generally comes about due to high deductions relative to income. In calculating your alternative tax, instead of several of the deductions you'd otherwise get for such expenses as property and state taxes, personal exemptions or, if applicable for you, the standard deduction, you get a standard AMT deduction and then a flat tax rate of 26% or 28%.

For most taxpayers, the only income 'preference' item, (income not subject to regular income tax but income for calculating alternative tax), is interest received on revenue, or income, or private activity bonds (these are different names for the same thing). The bonds you've mentioned, if issued by your state, are general obligation bonds, which are backed by the taxing authority of the goverment that issued them, so they will not be income for calculating your alternative minimum tax.

However, capital gains on these bonds will be includable as income for regular and alternative tax

BruceM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement