Interest income on private activity bonds issued in 2015 reduced by expenses incurred in carrying the bonds is a preference item that is included in computing AMTI.

Question

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Interest income on private activity bonds is a preference item that must be added back into the regular taxable income to compute AMTI. Expenses incurred in carrying the bonds can be deducted from the interest income to arrive at the taxable income. However, these expenses do not reduce the interest income for AMTI purposes.

Interest Income on Private Activity Bonds Issued in 2015 Reduced