With regard to the alternative minimum tax (AMT),
I.the AMT rate equals the highest individual income tax rate.
II.the AMT is separate and distinct from, yet parallel to, the regular income tax system.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

With regard to the alternative minimum tax (AMT),
I.the AMT rate equals the highest individual income tax rate.
II.the AMT is separate and distinct from, yet parallel to, the regular income tax system.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

II is correct because the AMT operates as a parallel tax system to the regular income tax, designed to ensure that individuals and corporations with substantial income cannot avoid significant tax liability through deductions and credits. Statement I is incorrect because the AMT rates are not necessarily equal to the highest individual income tax rate; they are set at 26% or 28% for individuals.

With Regard to the Alternative Minimum Tax (AMT)