Is it actually possible to avoid AMT and enjoy some Tax relief? Well apparently it is! It is large once-off gains and deductions that generally triggers AMT.
These gains are sometimes avoidable and in many cases can be controlled.
As with most things, careful future planning is key to enjoying Tax relief from AMT and by planning ahead and using practical and innovative solutions you may well be able to avoid it.
By timing capital gains it may be possible to avoid AMT.
It is possible for you to delay the sale of an asset to the following year or spread gains over a number of years with the use of an installment sale.
Also ensure to time your deductible expenses.
Whenever possible time the payment of deductible expenses such as state taxes, local taxes and home equity loan interest.
These expenses are not deductible for AMT and these deductions might then go unused in a year when you are subject to AMT.
This also applies to medical deductions which face event stricter rules in terms of AMT.
Exercising ISO's is like a red rag to a bull when it comes to triggering AMT.
AMT on the proceeds for ISO's can be very significant, ISO tax matters are very complex and if you have no understanding of the impact on AMT, be sure to consult with a professional first before proceeding with any steps that might jeopardize Tax relief.
The same applies to Incentive Stock Options, the red flag! If you exercise these stock options you have to notify the IRS and report an adjustment.
This adjustment is equal to the difference between the exercise price and a fair market price.