Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I need some help understanding what is happened here for 2013. I completed a "what if" in TT and was surprised to see that AMT was triggered - by LT cap gains, apparently.

I expected a 25% marginal tax bracket and 15% LT cap gains. Instead I seem to get AMT at 27%? (That 15% cap gain rate was an important consideration when I sold the stock. An alternative was a Roth distribution. Or even a mortgage. I thought I was choosing instead a 15% cap gain rate. NOT???)

I'd really like to better understand AMT. It seems as though my cap gains are effectively taxed at 26% under AMT for 2013?

Caveat. This is NOT a normal year. But here are the #s for 2013 in hopes that someone can parse it out for me re what happened.

LT cap gain: 71,435.

RMD: 71,322.

Taxable SS: 37,137.

Tot Inc: 175,019.

AGI: 175,019.

St Deduct: (14,600).

3 Exempts: (11,700).

Taxable Inc: 148,719.

Tax: 21,885.

AMT: 3971.

Tax: 25,856.


My attempt at AMT:

AGI: 175,019

Exempt: 80,800

= : 94,219

And, 94,219 X 26% = 24,497.

OR, 94,219 x 27% = 25,439. Which is closer to the 25,856 above #.


Is the effective cap gain rate 27% in this example? Did the AMT exemption phase out apply, too? Or what?

Thank you.


ps Hindsight. I should have run "what if" before the sale. I just never DREAMED that the sale would trigger AMT.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.