Ted,who is single,owns a personal residence in the city.He also owns a condo near the ocean.He uses the condo as a vacation home.In March 2017,he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile.During 2017,he paid the following amounts of interest.

What amount,if any,must Ted recognize as an AMT adjustment in 2017?

A)$0
B)$4,800
C)$6,200
D)$11,000

Question

Ted,who is single,owns a personal residence in the city.He also owns a condo near the ocean.He uses the condo as a vacation home.In March 2017,he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile.During 2017,he paid the following amounts of interest.
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What amount,if any,must Ted recognize as an AMT adjustment in 2017?

A)$0 
B)$4,800 
C)$6,200 
D)$11,000

Quizplus · Accepted Answer

Ted must recognize an AMT adjustment of $4,800. The interest paid on the home equity loan used to acquire the luxury automobile is not deductible for regular tax purposes due to the $100,000 home equity loan interest deduction limit under the Tax Cuts and Jobs Act of 2017. However, this interest is still deductible for AMT purposes. Therefore, Ted must add back the $4,800 of interest paid on the home equity loan as an AMT adjustment.

Ted,who Is Single,owns a Personal Residence in the City