What is Wrong with this picture

[Snaggletooth]

Let's don't go into whether you like Trump or not.

A blurb was released yesterday, claiming his 2005 return created a tax liability of $36MM on income of $148MM. O.K. doesn't exactly blow us out of the chair, right?

But it's time for Paul Harvey's "Rest of the Story".

The blurb goes on to say Trump paid $5MM on his income, then $31MM in "Alternative Minimum Tax." The obviously biased report went on to say Trump wants to get rid of the AMT.

How can this possibly be? I have had a few incomes of $4-$5 MM in my career, and in every case, the ultimate tax bracket (being high) washed out the AMT percentage of 28%. It's absurd to think there were enough purposeful tax preference items to create an AMT on an income that large.

Is this AMT even a possibility, or is it fodder for the media?

[kathyc2]

It appears the negative 103M line 21 (nol?) was allowable for regular tax, but not for AMT tax.

https://assets.documentcloud.org/documents/3517505/Dt-2005-Tax-768x2001.pdf

[kathyc2]

I see he's going to be in Nashville tonight. Maybe you could go and ask him since he's "the king of the tax code" according to him.

[TAXNJ]

I ...,,,since he's "the king of the tax code" according to him.

Do not think so. Rather the Tax Attorneys and Tax Specialists maybe. Then again if one looks at a tax rate comparison others maybe smarter:

Trump (2005) 25.3% vs Obama (2015) 18.7% vs Sanders (2014) 13.5%


There's giving your "fair share".

Snagg think you are correct asking "fodder for the media?"

[Rapid Robert]

Let's don't go into whether you like Trump or not. [...] The obviously biased report went on to say Trump wants to get rid of the AMT.

If you are neutral about Trump, how did you determine the report was "biased"? Are facts now "biased" if one doesn't like them?

How can this possibly be? [...] It's absurd to think there were enough purposeful tax preference items to create an AMT on an income that large.

Why is it absurd? I understand the AMT pretty well, and I would not think it absurd at all. The AMT is essentially a flat tax that does its job very well. Also, what is a "purposeful" tax preference item? Are you saying that there are also "accidental" ones?

[Snaggletooth]

Reply to Fast Bob

I'll answer your questions, to perhaps defray your wonderment of my original post.

I never really stated I was "neutral" about Trump, and my beliefs have nothing to do with the tax phenomenon. I believe all media is biased, and those who lean conservative or liberal are bad about presenting only what suits their agenda. Any layman who doesn't understand the complicated nature of the AMT would be led to believe that Trump wants to get rid of the AMT to relieve himself of the tax for his own selfish reasons.

The AMT basically does two things - adds back tax preferences to income, and after having done that removes a taxpayer's ascent through lower tax brackets until his entire income exceeding the exclusion is leveled out at 28%. For millionaire incomes once the 28% level is reached the "regular" tax bracket exceeds the AMT and it loses its impact.

I don't believe the tax preference items are part of an intentional tax strategy (except to avoid them). For the most part these are not something a taxpayer would intentionally engage, but they do "happen" usually without being intentionally invoked by the taxpayer.

Perhaps the best explanation for the wide disparity in the AMT came from Kathy's suggestion that if there were huge NOLs then "regular" tax would be lowered, but with no effect on the AMT.

And for what it's worth, I won't drive the 60 miles to see Mr. Trump in Nashville this afternoon. With or without the traffic snarls.

[Twin Turbo Z]

Make America Great Again !!!!!!!

[Rapid Robert]

Any layman who doesn't understand the complicated nature of the AMT would be led to believe that Trump wants to get rid of the AMT to relieve himself of the tax for his own selfish reasons.

The AMT is not really all that complicated, it only appears that way because of the bass-ackwards way we calculate it, by making adjustments to regular tax. That right there is one of the problems with what laypeople do and don't *think* they understand.

If you could start from scratch and just calculate an AMT tax return, you'd see it's very simple, almost like that postcard people keep talking about. No dependents, -- let me repeat, NO DEPENDENTS, none of that qualifying child/relative complexity -- no HoH filing status, many of the Sched A deductions eliminated, no standard deduction calculations based on age or blindness, no state tax refund rigamarole or optional sales tax deduction, no complicated mortgage interest calculations to allocate interest among three different kinds of mortgage debt, much simpler depreciation, lots of credits eliminated, only two brackets plus a cap gains rate, basically a very simple tax.

It's like saying that cash basis accounting is complicated, if they only way you ever present it is first as accrual accounting and then a bunch of adjustments. That would be a dishonest presentation, right?

For over fifty years, the AMT has stayed in place because it is an effective solution to a known problem, which is all the massive loopholes embedded in the regular tax system. Now, what reasons other than selfish ones would one have for eliminating it? What problems would it solve? If you want simplicity and fairness, you should eliminate the regular tax and keep the AMT.

[Burke]

I like the way you think! AMT, AMT, America's Main Tax, yea! Just lower the rate and make everybody happy.

[Roland Slugg]

Jeez, Snag, enough already with your political rants and commentary.

Wasn't it you who, just a few days ago, posted a message on this forum about a politically oriented post that was removed by the TMI folks? And yet here you are posting one of your own.

[Twin Turbo Z]

Jeez, Snag, enough already with your political rants and commentary.

Wasn't it you who, just a few days ago, posted a message on this forum about a politically oriented post that was removed by the TMI folks? And yet here you are posting one of your own.

Touche !!!!!

[Snaggletooth]

If you could start from scratch and just calculate an AMT tax return, you'd see it's very simple, almost like that postcard people keep talking about.

Never thought of it from that perspective, Fast guy. But I'm thinking you are correct - it is only our approach for the AMT from an "adjustment" mindset that makes it seem complicated. If directly applied, the AMT would be much simpler than the 1040.

[Snaggletooth]

No politics Sluggo

Jeez, Snag, enough already with your political rants and commentary.

Wasn't it you who, just a few days ago, posted a message on this forum about a politically oriented post that was removed by the TMI folks? And yet here you are posting one of your own.

Sluggo you should know better. I've done my best to insure this thread does not drift into partisan political rants. Whether we like it or not, tax legislation cannot be separated from the politicians of both parties, and I couldn't help that the AMT subject at hand was manifest in a tax return from a controversial President.

Where we cross the line is when we express support or despair for a particular candidate or party, start name-calling and respond in kind to other board members who do the same. When that happens the moderators have no choice.

I have drifted close on occasions when expounding on the fate of legislation in progress. The extreme AMT phenomenon happened to fall on a very visible politician, otherwise the same commentary could be made on your next-door neighbor.

[taxea]

Let's don't go into whether you like Trump or not.

A blurb was released yesterday, claiming his 2005 return created a tax liability of $36MM on income of $148MM. O.K. doesn't exactly blow us out of the chair, right?

But it's time for Paul Harvey's "Rest of the Story".

The blurb goes on to say Trump paid $5MM on his income, then $31MM in "Alternative Minimum Tax." The obviously biased report went on to say Trump wants to get rid of the AMT.

How can this possibly be? I have had a few incomes of $4-$5 MM in my career, and in every case, the ultimate tax bracket (being high) washed out the AMT percentage of 28%. It's absurd to think there were enough purposeful tax preference items to create an AMT on an income that large.

Is this AMT even a possibility, or is it fodder for the media?

Was the 148MM the AGI? That return also had an NOL on Ln 19 for 103MM.