AMT
Response to the following problem:
James M. (SSN 346-57-4657) and Tammy S. (SSN 465-46-3647) Livingston prepared a joint income tax return for 2014 and claimed their four children as dependents. Their regular taxable income and tax liability were computed as follows:
Salaries $ 90,000
Schedule C net profit 84,000
Nonqualified dividend income 4,700
Interest income 2,350
Adjusted gross income $181,050
Itemized deductions (23,000)
$158,050
Personal exemptions (23,700)
Taxable income $134,350
The Livingstons received $25,000 of tax-exempt interest from specified private activity bonds purchased in 2005. In computing taxable income, the Livingstons took $7,000 depreciation on Schedule C, using the MACRS 200% declining balance method on property with a fiveyear class life. AMT allows $5,500 of depreciation for the same property. Itemized deductions include charitable contributions of $9,000, state and local property taxes of $6,712, casualty losses of $775 (after the 10% AGI floor), state income taxes of $4,513, and miscellaneous itemized deductions of $2,000 (after the 2% AGI floor). Complete Form 6251 for the Livingstons.