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To: Bill Harmond who wrote (94261)	2/21/2000 3:31:00 PM
From: H James Morris	Respond to of 164684

>Focus on what's right. Life goes on, and the universe is unfolding as it will. Your right. Let's talk about something fun. How about AMT? >February 20, 2000 Federal lawmakers made much ado about declawing the Alternative Minimum Tax. And, indeed, a tax bill signed into law in December will shield an estimated 1 million lower-and middle-class taxpayers who would have tripped into the "tax on the rich" simply by claiming the $500 child credit and certain other tax breaks. But make no mistake about it: The AMT is far from dead -- especially in areas where incentive stock options, pricey homes, high state taxes and big deductions are bait for the beast. "Not here. Not in this world with all the zeros we have," said Peggy Rule, director of the IRS' central California district, which has headquarters in San Jose. "When you look at the income levels in this area, people are still on the hook." The truth is the AMT's range is wide, and many victims can't imagine ever encountering it in their neighborhood. The AMT is so misunderstood that many taxpayers don't realize they are supposed to calculate both their regular income tax and their AMT -- and pay whichever is higher. Though the AMT was designed to ensure that even the rich pay their "fair" share, AMT strikes people at all income levels, from the ultrawealthy to the single mom in the lowest tax bracket. One Kansas couple with 13 kids even lost out because big write-offs from personal exemptions and cancer treatments for a sick child reduced their regular tax so much that they owed the AMT instead. The most recent IRS statistics show that more than 618,000 individual taxpayers owed AMT in 1997, a 29 percent increase from the previous year. It snared about 1 percent of the taxpayers with adjusted gross income between $50,000 and $100,000 -- and 4.5 percent of those earning $100,000 to $200,000, according to CCH Inc., a tax information services company in Riverwoods, Ill. If no changes are made, 17 million taxpayers will owe AMT by 2010, the Treasury predicts. More taxpayers than ever are susceptible because the AMT hasn't been indexed for inflation since it was created in 1969, causing "bracket creep" as incomes and so-called AMT preferences rise in dollar value. As a result, the AMT income that is exempt remains at $33,750 if you're single and $45,000 if you file a joint return. The AMT attacks big-game items, blunting the write-offs on mortgage interest, itemized deductions, medical expenses, personal exemptions and standard deductions. It adds back such things as state, local and foreign property taxes and the bargain element on incentive stock options. Although tax pros have no reliable rules of thumb to predict whether you might be susceptible to the AMT, incentive stock options are as good a reason as any to pull out IRS Form 6251 to crunch the numbers. "Don't just blithely assume the AMT couldn't apply to you," said CCH tax analyst Mark Luscombe, "because it applies to more and more people who assume it couldn't apply to them."