Meg,who is single and age 36,provides you with the following information from her financial records. Calculate her AMT exemption for 2012.
A) $0.
B) $23,450.
C) $14,075.
D) $48,450.
E) None of the above.

Question

Meg,who is single and age 36,provides you with the following information from her financial records.  Calculate her AMT exemption for 2012.
A) $0. 
B) $23,450. 
C) $14,075. 
D) $48,450. 
E) None of the above.

Quizplus · Accepted Answer

In 2012, the AMT exemption for single individuals was $50,600 but it phases out at a rate of 25 cents per dollar of AMTI over $112,500. Meg's AMTI is calculated as follows:
Salary: $75,000
Mortgage interest: $14,000
State and local taxes: $5,000
Miscellaneous itemized deductions: $3,000
Standard deduction: -$5,950
Personal exemption: -$3,800
AMTI: $82,250
Meg's AMTI is over the phase-out threshold of $112,500, so her exemption is reduced by $17.50 for every $100 over that threshold. Her AMTI is $82,250 - $112,500 = -$30,250, which means her AMT exemption is completely phased out. Therefore, the correct answer is (C) $14,075.

Meg,who Is Single and Age 36,provides You with the Following