Alternative Minimum Tax

REG tests this as a build-up calculation: start with regular taxable income, add back preferences and adjustments (the classic tells are ISO bargain element on exercise, private-activity bond interest, and depreciation/percentage-depletion timing) to reach AMTI, subtract the AMT exemption (which phases out 50 cents per dollar of AMTI above the threshold from 2026, up from the 25-cent rate through 2025 that older banks still cite), then apply the 26%/28% rates to get tentative minimum tax. The number the answer hinges on is tentative minimum tax minus regular tax — only a positive difference is the AMT you actually add.

The classic trap is treating add-backs as permanent: timing/deferral items (ISOs, depreciation) create a basis difference and a minimum tax credit carried forward against future regular tax, while exclusion items (private-activity bond interest, the standard deduction) never reverse. Don’t confuse the standard deduction, an AMT add-back, with credits — and remember the higher exemptions are now permanent, so individual AMT rarely bites, while the reinstated corporate AMT (CAMT) hits billion-dollar firms.