AMT Rules of thumb
Please forgive me for this non-ira question but I know there are lot of smart tax people who may be able to answer this:
Assume a bond investor has AGI > 500k and is fully subject to AMT.
He is faced with a decision to buy either a muni bond subject to AMT or a corporate bond fully taxable. Let’s say they both are 7% at par. Looking solely at tax considerations should he be indifferent? Will the muni income be just as taxed as the corporate due to AMT.
What are some good rules of thumb or a quik taxable equivalent type equation to do this analysis?
Permalink Submitted by mk foss on Mon, 2009-01-12 01:19
The one certain thing about AMT is that there are no rules of thumb that work all of the time. You really need to do a projection with all of the other items that would affect the tax return.
For example, sometimes it is best to prepay state tax when you have large capital gains and are in AMT and other times it is not beneficial.
Good luck.