Land Sale & AMT - should have done a 1031!

[Jane_Doe]

Ok, if I have this right:

Example:
Ordinary earned income:* 65,000 X highest AMT rate

Long Term Cap Gains: 1,200,000 x 15% cap gains rate

is this correct - if so I can sleep like a baby*

if not .....

BTW I did try the calculators you linked and think they want the big money

Thanks a bunch,
Jane*

[mathjak107]

we were able to lower our taxes by filing married seperatley this year..since the capital gain was in my wifes name only on a business venture she is in it made sence.i realized if we filed jointly even my salary would be hit with the amt and since once you phase out all deductions married or single dosnt matter since amt is flat rate...so heres the actual numbers off my wifes 1040....she only works part time so her income is only around 15,000 or so.the rest is investments and the capital gain from the sale of the nyc co=ops....

total income 741,457
regular taxes 115,047
amt penealty adder 12,186
total taxes 127,233

the state and local was a killer and was another 77,000

[mathjak107]

long term capital gains it seems does get hit at less than 28% as it looks like overall just over a flat 17% if you take the taxes divided by the amount...of course if we filed jointly if the capital gain was in both our names it would be higher because then my entire salary would be amt penalized at the 28% since its not a long term gain

[mathjak107]

Originally Posted by Queen Martha

You will pay at the 25% rate on the recapture of depreciation.*

Your calculator won't work quite right because your AMT is going to apply to your non-capital gain income.* The capital gain income simply serves to cut into your AMT exemption and expose more of your other income to tax.* So, for example, last year we had considerable capital gain income from capital gains* and about 25% of our income was from ordinary income sources.* Our average federal tax rate turned out to be about 16.75%, and that is with paying some AMT.*

EDIT: For very rough calculators, I suggest checking that thread I linked to above.

not really the way it works or else our amt on her 15,000 earned income would be way less ...basically i think it comes down to the amt really being the phase out of the 58,000 or so amt deduction for a married couple so it adds 28% or so of the 58,000 deduction as it gets reduced by more income..our overall 17% from dollar one shows its not 28% across the board. on long term capital gains....it also is linked to deductions ...for 2006 the 77,000 we paid in state and local taxes will send us back on the amt again this year even with just regular income and no capital gains this year...on our 135,000 income our total deductions for 2006 would be about 97,000 on schedule a....our overall taxes would normally be about 3,000 if it wasnt for the amt...the amt brings us up to about 15,000 for 2006..

[Jane_Doe]

Thanks, MathJak!

Boy, this really is confusing! I haven't put Turbo Tax onto my computer yet (always afraid to add stuff - hate it when my computer crashes), but probably will today just to get a more acurate picture. I really appreciate having real numbers from you to give me a better idea how it really works. I think maybe it really may work out ok. I sure hope so! DH wants me to call our accountant today, but this is something that can wait until after the 17th - his office is always nuts this time of year and he always seems so tired!

Anyway, I will run the numbers (assuming the old computer will take the new program ...) and report back.

Thanks again - talk with you later!

Have a great day!

Jane

[Jane_Doe]

Okay, I've spent the last couple of hours working on Turbo Tax.

And the results seem to point towards a little over 15%. I am not totally trusting of this process, so will confirm later on with our accountant. Meanwhile, after I get a bite of lunch I will weed/read thru the printouts to verify all is in order, etc. and try to make sense of this (if possible!!)

I think we are in the clear (I hope!!!).

Thanks a lot guys! Any further discussion/enlightenment more than welcome!

Boy is this a great forum or WHAT!!

Have a WONDERFUL day!!!

Jane