How do I calculate alternative minimum tax?

September 15, 2006

Date:  Fri, 28 Jul 2006
From:  Lynn

Hello,

I am trying to estimate my income taxes for the sale of a property. I sold it for $193,000. The capital gains are $165,000, depreciation is $52,000, and other annual income is $17,000. I am wondering if I will be subject to the alternative minimum tax.

How can I figure that out?

Sincerely,
Lynn

Answer

Date:  02 Aug 2006

Hello Lynn,

Download 2005 Form 1040, Schedule D and 2005 Form 6251 from the IRS web site at http://www.irs.gov. Part III of Form 6251 is for the computation of the AMT using maximum capital gains rates. Get the Qualified Dividends and Capital Gain Tax Worksheet at page 38 of the instructions for Form 1040. Remember that capital gains up to the amount of accumulated depreciation for real estate is subject to a 25% federal tax rate for regular tax and AMT.

If you need more detailed help in making the computation, you will need to pay consultation fees.

Good luck!


Mike Gray

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