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Arthur Wesson, an unmarried individual who is age 58 , reports taxable income of $510,000 in 2023 . His AMTI is $625,000, and his regular tax liability in 2023 is $150,395. Click here to access the exemption table. a. Arthur's initial AMT exemption amount for 2023 is $ , since his filing status is single. However, the exemption is at a rate of 25 cents on the dollar when AMTI exceeds $ - Therefore, Arthur's total AMT exemption will be A graduated, two-tier AMT rate schedule applies to individual taxpayers. A rate applies to the first $220,700 of the AMT base, and a rate applies to the AMT base in excess of $220,700. Compute Arthur's AMT for 2023. b. What is the total amount of Arthur's tax liability? c. Complete the e-mail explaining to Arthur why he must pay tax greater than his regular tax liability. From: Samantha Ash ([email protected]) Sent: February 6, 2024 To: Arthur Wesson ([email protected]) Subject: 2023 income tax liability Dear Mr. Wesson: We have calculated your total Federal tax liability for 2023 to be $ . This consists of the regular tax liability of $150,395 and the alternative minimum tax (AMT) liability of $ Because this is the first year you have been subject to the AMT, I thought I should comment on this additional tax. The calculation of the AMT appears on Form 6251. The AMT a parallel income tax system. Its purpose is to provide assurance that no taxpayer with substantial economic income can avoid significant tax liability by using exclusions, deductions, and credits. As indicated on Form 6251, some of the exclusions and deductions that are part of your regular taxable income are as a part of the AMT calculation. These items increase your regular taxable income amount and, as a result, subject you to AMT in the current tax year. I would like to work with you to minimize any future AMT liabilities. Because this is our first year to do tax compliance work for you, we may be able to incorporate some tax planning to reduce your Federal tax liability. Please e-mail me to schedule a meeting. Sincerely, Samantha Ash, CPA

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