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STRATEGIC ISSUES...ONLINE 
For week of April 17, 2006, Issue #258
 
Featured Articles:
1.  Some AMT Planning Tips for Individual Taxpayers
2. Tech Tip Weekly:  Adding Trendlines to an MS Excel Chart
3. Compliance Calendar
 
 
If you would like to have further information on any of these articles, let us know.  We would appreciate receiving your comments and/or suggestions, anytime!
 acarroll@pmcpa.com
 
 
1.  Some AMT Planning Tips for Individual Taxpayers
 
Since 1969 the Internal Revenue Code has included an alternative minimum tax (AMT), originally designed to prevent wealthy taxpayers from claiming so many deductions that they wound up paying little or no taxes.
 
Under the AMT, taxpayers with large amounts of regular tax deductions and credits have to add back these preferences, subtract flat exemption amounts, adjust for long-term capital gains taxes and recompute the tax. If the result is more than their regular tax liability they must pay this amount in addition to their regular tax liability.
 
Preferences that must be added back include the standard deduction, personal exemptions, a portion of medical expenses, state and local taxes, some mortgage interest, a portion of miscellaneous itemized deductions, net operating loss deductions, passive income or loss deductions, a portion of accelerated depreciation and some income from the exercise of incentive stock options.  Exemption amounts differ, depending on the taxpayer's filing status, and are phased out if AMT income exceeds certain limits.
 
Managing AMT
 
Because so many of the dollar amounts used in calculating the AMT were not indexed for inflation until recently, and because more and more credits and allowances that lower regular tax liabilities have been added to the tax code, an increasing number of middle-income taxpayers are finding themselves liable for the AMT this year.  These individuals are looking for legitimate ways to minimize this additional tax.
 
Note that any AMT planning should involve multiyear projections, to determine both the regular tax and AMT liabilities over a number of years and to decide what actions will provide the best results over the long run.
 
Some Strategies
 
-Postpone (or prepay) some itemized deductions.  If there are regular tax deductions that will be added back for AMT purposes and that a taxpayer has flexibility in paying (for example, state and local taxes), delay paying these taxes until next year to avoid a current-year AMT liability.  Likewise, if a taxpayer is not subject to AMT in the current year but likely will owe AMT next year, he or she might try to manage that AMT liability and consider prepaying some of next year's state and local taxes.
 
-Some employees may be able to negotiate with their employers for earlier payments of income that would normally be paid shortly after year end (such as bonuses).  By doing this a taxpayer may be able to have this income taxed at whichever rate (AMT or regular tax) is lower for a given year.
 
-Accelerate the timing of charitable gifts.  Charitable deductions are deductible for both AMT and regular tax purposes.
 
-If you invest in municipal bonds for tax free income, make sure the bonds you invest in are not private activity bonds subject to AMT.
 
If you are or if you think you maybe are subject to the AMT, call us to help minimize the impact.
 
 
2.  Tech Tip Weekly:  Adding Trendlines to an MS Excel Chart
 
You can add trendlines to your MS Excel charts that display a trend implied by the charted data.  Trendlines are often added to XY (Scatter) charts that correlate between the two sets.
 
To add a trendline to your chart, you choose Chart, Add Trendline on the MS Excel menu bar (note that the Chart menu appears on the regular MS Excel menu bar only when you select an embedded chart).  This action opens the Add Trendline dialog box.  Here, you can choose the type of trend in the Trend/Regression Type section (Linear, being the most common, is the default) and the data series on which to base the trend in the Based on series list box.
 
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