After computing all tax preferences and AMT adjustments,Peter has AMTI of $210,000 in 2017.If Peter is single,what exemption amount can he claim for AMT in 2017?
A)$0.
B)$31,975.
C)$54,300.
D)$84,500.

Question

Quizplus · Accepted Answer

For single taxpayers, the AMT exemption amount for 2017 is $54,300 but it is phased out at a rate of 25% for AMTI above $120,700 (for 2017). Since Peter's AMTI is $210,000, his exemption amount is reduced by [(210,000-120,700)/10,000]*25% = $8,325. Therefore, Peter can claim an AMT exemption of $54,300 - $8,325 = $45,975. However, this exemption amount is further reduced by 25% of the amount by which his AMTI exceeds $160,900. Since Peter's AMTI is above this threshold, his exemption amount will be reduced by an additional $14,000 (25% of $49,100). Therefore, Peter can claim an AMT exemption of $45,975 - $14,000 = $31,975.

After Computing All Tax Preferences and AMT Adjustments,Peter Has AMTI