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Alternative Minimum Tax and Passive Income/loss & At-Risk Amount

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Harsh Khandelwal
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17 views1 page

Alternative Minimum Tax and Passive Income/loss & At-Risk Amount

Uploaded by

Harsh Khandelwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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5847-13-27MC AID: 59852 | 08/07/2020

Alternative minimum tax and Passive income/loss & At-risk amount

AMT is applicable to individual & corporation. It is a separate tax system which


eliminates the tax escape. Passive activities are those where a taxpayer is not materially
involved in the business activity. Income or losses from passive activities are not
considered for AGI. At-risk amount is the amount invested or borrowed without any
recourse.

Income from active participation in business is considered for AGI. Any income or loss
arising out of passive activity is not considered for adjustment in income.

Therefore, option (a) is incorrect.

Adjustment of passive activity income is not done in adjusted gross income.Income from
active participation in business activity forms part of AGI.

Therefore, option (b) is incorrect.

Adjustment of gain from passive activity is not done since no adjustment of passive
business activities is done in AGI.

Therefore, option (d) is incorrect.

Income from active participation in business is considered for AGI. Any income/loss
arising from passive activity is not considered for adjustment in AGI.

Hence,option ( c )is correct.

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