Taxpayer who uses standard deduction may not use itemized deductions in computing AMT.

• Author: Fiore, Nicholas J.
• Position: Alternative minimum tax

May a taxpayer who uses the standard deduction in computing taxable income for regular tax purposes use itemized deductions when computing alternative minimum taxable income (AMTI) for alternative minimum tax (AMT) purposes?

The starting point for determining AMTI is taxable income as reported for regular tax purposes. Sec. 55(b)(2) states, "The term `alternative minimum taxable income' means the taxable income of the taxpayer for the taxable year--(A) determined with the adjustments provided in section 56 and section 58, and (B) increased by the amount of the items of tax preference described in section 57." (Emphasis added.) Thus, a taxpayer who has elected to use the standard deduction in lieu of itemized deductions begins the computation of AMTI by using a taxable income figure that takes into account the standard deduction, but not itemized deductions.

Sec. 56(b)(1)(E) then states that, in computing AMTI, the standard deduction shall not be allowed. Thus, taxable income is increased by the amount of the standard deduction. No provision exists, however, for decreasing taxable income by the amount of itemized deductions never taken into account when computing taxable income. Without such authority, Sec. 63 precludes a taxpayer from using itemized deductions for both regular and AMT purposes.

Sec. 56(b)(1)(F) only states that, when computing...