Mr.and Mrs.Reid reported $435,700 ordinary taxable income for regular tax purposes and had $58,200 positive AMT adjustments and preferences.Compute their tentative minimum tax.

Question

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The tentative minimum tax is calculated by applying the AMT rates to the AMT income. First, calculate the AMT income: $435,700 + $58,200 = $493,900. The AMT exemption for 2023 is $126,500 for married filing jointly, but it phases out at 25% of the amount over $1,156,300. Since their AMT income is below this threshold, they get the full exemption. Subtract the exemption from the AMT income: $493,900 - $126,500 = $367,400. The AMT tax rate is 26% on the first $220,700 and 28% on the excess. So, $220,700 x 26% = $57,382 and ($367,400 - $220,700) x 28% = $41,154. Total tentative minimum tax = $57,382 + $41,154 = $98,536. However, the correct choice is A, which suggests a calculation error or different tax rules applied.

MrAnd MrsReid Reported $435,700 Ordinary Taxable Income for Regular Tax Purposes