A, B and C are each single, report wage income of $135,000, and take the standard deduction. The following additional information is provided about each taxpayer.
A: Resides in New York. $45,000 interest income from Treasury bonds.
B: Resides in Nevada. $45,000 capital gain from the sale of stock.
C: Resides in Florida. $45,000 interest income from private-activity municipal bonds.

All else being equal and taking into consideration the principles underlying the AMT, which of these taxpayers has the highest likelihood of being subject to the AMT in the current tax year?

A)Taxpayer A.
B)Taxpayer B.
C)Taxpayer C.
D)Taxpayer D.

Question

​A, B and C are each single, report wage income of $135,000, and take the standard deduction. The following additional information is provided about each taxpayer. ​
A: Resides in New York. $45,000 interest income from Treasury bonds.
B: Resides in Nevada. $45,000 capital gain from the sale of stock.
C: Resides in Florida. $45,000 interest income from private-activity municipal bonds.
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All else being equal and taking into consideration the principles underlying the AMT, which of these taxpayers has the highest likelihood of being subject to the AMT in the current tax year?
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A)​Taxpayer A.
B)​Taxpayer B.
C)​Taxpayer C.
D)​Taxpayer D.

Quizplus · Accepted Answer

Taxpayer C has the highest likelihood of being subject to the AMT in the current tax year due to the interest income from private-activity municipal bonds. The interest income from private-activity municipal bonds is added back to calculate the AMT, whereas the interest income from Treasury bonds and capital gains are not added back. Additionally, residing in Nevada or New York does not directly impact the likelihood of being subject to the AMT.

​A, B and C Are Each Single, Report Wage Income

A, B and C Are Each Single, Report Wage Income