Tax preference item

tax preference item
item specified by the tax law that a taxpayer must include when calculating the Alternative Minimum Tax (AMT) . Preference items include:
addition of personal exemptions.
addition of the standard deduction.

Tax Preference Item
Financial & Investment Dictionary:
Tax Preference Item
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Tax preference item
Items that must be included when calculating the alternative minimum tax.
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TAX PREFERENCE ITEM " Items deductible for Federal income tax purposes which are included in the calculation of the alternative minimum tax. See: Alternative Minimum Tax.

Tax Preference Items: Tax preference items are specified types of income and deduction that are included in taxable income in determining whether the taxpayer has to pay the alternative minimum tax, I.R.C. §§ 57, 55.

Tax Preference Item
A type of income, normally tax-free, that may trigger the alternative minimum tax (AMT) for taxpayers.

tax preference item This Item often subjects taxpayers to alternative minimum taxes. tax rate The percentage of an entity's income, goods, services or assets that is paid...

For individuals, the AMT is calculated by adding adjusted gross income to tax preference items.

The AMT may apply to those who have substantial tax deductions or derive substantial income from so-called "tax preference items" - incentive stock options, certain private activity municipal bonds, and other types of tax-sheltered investments.

Like individuals, corporations can become subject to an alternative minimum tax (AMT) if they have gained the benefit of "too many" tax preference items.

A tax calculation that adds certain tax preference items back into adjusted gross income. If AMT is higher than the regular tax liability for the year, the regular tax and the amount by which the AMT exceeds the regular tax are paid.

This tax primarily affects high-income taxpayers who shelter some of their income from taxation through certain tax preference items or deductions. It is often referred to as AMT.

For taxpayers subject to the alternative minimum tax, certain tax preference items, including interest on some private activity bonds, ...

Alternative Minimum Tax (Corporation): A federal tax applied to regular business income with adjustments made for tax preference items.
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A federal tax aimed at ensuring that wealthy individuals, estates, trusts, and corporations pay a minimal level income tax. For individuals, the AMT is calculated by adding adjusted gross income to tax preference items.
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Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer.
Tax preference item ...

Alternative Minimum Tax (AMT)
A federal tax aimed at ensuring that wealthy individuals, estates, trusts, and corporations pay a minimal level income tax. For individuals, the AMT is calculated by adding adjusted gross income to tax preference items.

AMT usually becomes due when there is a large amount of miscellaneous itemized deductions. Miscellaneous itemized deductions subject to the 2-percent AGI limitation are a tax preference item for alternative minimum tax purposes.

See also: Expense, Banks, Saving, Tax deduction, Tax shelter