Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2012. In calculating gross income for regular income tax purposes, he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

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Quizplus · Accepted Answer

The $20,000 exclusion in calculating Jackson's gross income for regular income tax purposes is not a tax preference in calculating his AMTI. Tax preferences are items that Congress has deemed to be beneficial and therefore subject to an alternative minimum tax to ensure that taxpayers with certain types of income are not able to avoid paying taxes.

Jackson Sells Qualifying Small Business Stock for $125,000 (Adjusted Basis