Suchergebnisse

This report discusses the alternative minimum tax (AMT), which was enacted to ensure everyone pays a minimum of federal taxes.

"We take a first look at limitations on the use of energy-related tax credits contained in the General Business Credit (GBC) due to limitations within the regular corporate income tax as well as the AMT. Between 2000 and 2005, firms were unable to use all energy-related tax credits due to GBC limitations in the regular tax. The AMT has a smaller but still pronounced impact on the ability of firms to use these credits. Finally, we provide some illustrative calculations to demonstrate how the AMT can lead to very different levelized costs of producing electricity from a wind power project"--National Bureau of Economic Research web site

Front Cover -- Title Page -- Copyright Page -- Contents -- Preface -- Introduction -- Chapter 1: Basics of the AMT -- Filing Form 6251, the Alternative Minimum Tax-Individuals -- AMT Roadmap -- AMT Exemptions -- AMT Rates -- Capital Gains -- Chapter 2: Common AMT Adjustments -- Incentive Stock Options -- Limitation on Deductions -- Chapter 3: Unlikely AMT Adjustments -- Alcohol Fuel Credit -- Basis Adjustment -- Circulation Costs -- Depreciation -- Installment Sales -- Long-Term Contracts -- Mining Costs -- Net Operating Loss -- Passive Activity Losses -- Pollution Control Facilities -- Tax Shelter Farm Activity -- Chapter 4: Tax Preference Items -- Accelerated Depreciation (pre-1987) -- Depletion -- Intangible Drilling Costs -- Small Business Stock Exclusion -- Tax-Exempt Interest -- Chapter 5: Importance of the AMT Credits -- Nonrefundable Personal Credits -- Foreign Tax Credit -- Minimum Tax Credit -- Chapter 6: AMT Planning -- Tax Planning -- AMT Planning Specifics -- Specific AMT Planning Tips -- Comprehensive AMT Problems -- Final Thoughts -- Glossary -- Appendix A: Alternative Minimum Tax-Instructions and Form -- Appendix B: AMT Audits -- Index -- About the Author.

The Tax Reform Act of 1986 (TRA86) ushered in a new package of tax reform in the United States. So great was the change, that the 1954 Internal Revenue Code was replaced by a newer, updated, 1986 model. The new Code was designed to promote greater fairness within the system. Fairness, both real and perceived, was considered key in perpetuating confidence in a system based on self-assessment. As a cornerstone to the 1986 Code, a totally reworked alternative minimum tax, or AMT, was introduced. The new AMT superceded earlier versions in that it became a parallel system to the regular tax, as it had been an addon system in years previous. The AMT had as its stated intention a broadening of the tax base such that all taxpayers would share in the tax burden. With all taxpayers so sharing, all would believe that they had been treated fairly. This report took note of the intent of Congress in implementing the AMT, and then proceeded to analyze the secondary system both on a segmented basis (preference by preference, adjustment by adjustment), and later in an overall sense. Based on the analysis, the intentions of Congress were determined to be expedient and political, designed more to aid in reelection efforts than for the good of the country. Recommended as an alternative to the parallel regime, a one-tiered system was (re) introduced. The system would be kept as "flat" as possible, with limited incentives included as an exchange for less progressivity in tax rates. In the event some stimulus was needed in the economy, the necessary incentive would be codified and the rates adjusted. The likelihood of the American people experiencing Congressional action of a less political nature in the future was determined to be remote, so for new taxpayers may only receive comfort in remembering that hope springs eternal.

The corporate alternative minimum tax (AMT) was hailed in the Tax Reform Act of 1986 as instrumental to ensuring that tax loopholes would not permit corporations to avoid paying their fair share of tax liability. In 1995, less than ten years later, repeal of the AMT was pledged as part of the Republican Party's "Contract with America" and passed by the House of Representatives. Opponents of the AMT object that it penalizes new investment by firms and prevents the use of legitimate deductions. Its defenders tout the ability of the AMT to address public perceptions of unfairness in the tax system. At first glance, the debate over the AMT seems to be another example of the classic struggle between equity and efficiency. But, as this book reveals, there are serious flaws in the arguments used on both sides of this issue. As a result, the AMT may fail to achieve any notable equity objectives and may miss the opportunity to make significant improvements in the efficiency with which the nation's scarce capital is employed. Whether or not reforms of the AMT are ultimately enacted, the debate over the AMT raises fundamental questions of tax policy that will persist: Who benefits from tax subsidies? How much should the tax code be used to direct resources in the economy? If corporate taxes are ultimately borne by individuals, how do corporate tax provisions affect fairness? Andrew Lyon opens these topics up to a wide audience, presenting new data on the impact of the AMT, and offering suggestions for future policy reform. He argues that the legislative desire to respond to an apparent inequity should be channeled into considering whether there are efficiency reasons for reducing the tax advantages observed. The best solutions to these considerations, he contends, are not found in a minimum tax.

This report discusses the legislative activity in the 110th Congress related to the alternative minimum tax (AMT), which was originally enacted to ensure that all taxpayers, especially high-income taxpayers, pay at least a minimum amount of federal taxes.