Permalink Submitted by Alan Spross on Mon, 2010-11-22 17:54
The amount of the conversion is the key, but if the conversion income is deferred to 2011 and 2012, it will not affect 2010 at all. And who knows what Congress will do with the AMT for 2011 and 2012, when they have not even passed the annual patch for 2010 yet!
If the conversion were reported in 2010, a large enough conversion could result in the normal tax exceeding the AMT tax and thereby eliminating the AMT. But it can also result in the phaseout of the AMT exclusion. To get an accurate picture, both tax regimes have to be worked out with various conversion amounts. The conversion can be fully or partially recharacterized whether the marginal rate is the AMT rate or the normal rate to arrive at the amount you are willing to pay for the amount of the conversion that is retained.
I am not aware of any simple rules of thumb on this issue that are specific enough to individual taxpayers to be worth using.
Permalink Submitted by Alan Spross on Mon, 2010-11-22 17:54
The amount of the conversion is the key, but if the conversion income is deferred to 2011 and 2012, it will not affect 2010 at all. And who knows what Congress will do with the AMT for 2011 and 2012, when they have not even passed the annual patch for 2010 yet!
If the conversion were reported in 2010, a large enough conversion could result in the normal tax exceeding the AMT tax and thereby eliminating the AMT. But it can also result in the phaseout of the AMT exclusion. To get an accurate picture, both tax regimes have to be worked out with various conversion amounts. The conversion can be fully or partially recharacterized whether the marginal rate is the AMT rate or the normal rate to arrive at the amount you are willing to pay for the amount of the conversion that is retained.
I am not aware of any simple rules of thumb on this issue that are specific enough to individual taxpayers to be worth using.