Farr, an unmarried taxpayer, had $70,000 of adjusted gross income and the following deductions for regular income tax purposes:_

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3 years ago

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Farr, an unmarried taxpayer, had $70,000 of adjusted gross income and the following deductions for regular income tax purposes:_

________Home mortgage interest on a loan to acquire a principal residence $11,000Miscellaneous itemized deductions above the threshold limitation 2,000What are Farr's total allowable itemized deductions for computing alternative minimum taxable income?a. $2,000b. $13,000c. $11,000d. $0

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1 answer:

Karolina [17] · Answer 1 · 2021-12-21T09:32:50+03:00

Answer:

C. $11,000

Explanation:

For computational purposes, both the Mortgage interest as well as the miscellaneous itemized deducted qualify as deductions based on the Schedule A which is the regular tax purposes.

However, only Mortgage interest will be allowable itemized deduction because miscellaneous itemized deductions fall under the category of adjustments and as such do not qualify for deductions under the AMT which is the Alternative Minimum Taxable Income.

Based on the explanation, only $11,000 of mortgage interest qualifies.