Which item is an AMT adjustment that commonly causes AMT for individuals who itemize?

State and local taxes deducted as an itemized deduction

Mortgage interest on qualified acquisition debt for a main home

Charitable contributions of cash

How is the bargain element on the exercise of an incentive stock option treated for AMT if the stock is held past year-end?

It is an AMT adjustment that increases AMTI in the year of exercise

It is ordinary income for regular tax purposes

It is excluded for both regular tax and AMT

It is taxed as a long-term capital gain for AMT in the year of exercise

Interest on which type of bond is a tax preference item for the AMT?

Private activity bonds (other than those issued in 2009 or 2010 and certain other exceptions)

Which statement about the minimum tax credit is correct?

AMT caused by deferral items, such as ISO exercises, can generate a credit usable against regular tax in later years

The credit must be used within three years

All AMT paid generates a credit

AMT caused by the standard deduction creates a credit

Can a taxpayer who claims the standard deduction for regular tax use it for AMT?

No; the standard deduction is not allowed in computing AMTI

Only if the taxpayer is age 65 or older or blind at the end of the year

Alternative minimum tax (AMT)

The AMT is a parallel tax computed on Form 6251: add back items like state and local taxes and ISO bargain elements to reach AMTI, subtract the 2025 exemption ($88,100 single / $137,000 joint, phased out above $626,350 / $1,252,700), and apply 26%/28% rates; you pay the excess over regular tax.

Updated 2026-09-23 · 4 sources · By the EnrolledAgentKit team

Exam part

Part 1

Individuals

IRS domain

Taxation

15 of 85 scored Qs

Tax year tested

2025

2026-27 SEE

Practice questions

10 free below

The rules the exam tests

Figures for tax year 2025, the year the 2026-27 SEE tests. Verify against the cited primary source.
Rule	What it says (2025)	Source
Exemption (2025)	$88,100 single; $137,000 MFJ; $68,500 MFS	Rev. Proc. 2024-40
Exemption phase-out	25% of AMTI over $626,350 single / $1,252,700 MFJ	Rev. Proc. 2024-40
Rates	26% up to $239,100 of AMTI over exemption ($119,550 MFS); 28% above	IRC 55(b)
Common adjustments	SALT, standard deduction, ISO spread, some depreciation (150% DB)	IRC 56
Preferences	Specified private activity bond interest, certain depletion	IRC 57
Not adjusted	Qualified acquisition mortgage interest, charitable gifts, bonus depreciation	Form 6251 instructions
Minimum tax credit	Only AMT from deferral items; carried forward on Form 8801	IRC 53

Worked example

Facts: Single filer, 2025. Regular taxable income $300,000 after itemizing with $40,000 of SALT; exercised ISOs with a $150,000 spread and held the shares.

AMTI: $300,000 + $40,000 SALT + $150,000 ISO = $490,000. Below the $626,350 phase-out, so the exemption is the full $88,100. AMT base $401,900: 26% x $239,100 + 28% x $162,800 = $62,166 + $45,584 = $107,750 tentative minimum tax (ignoring preferential capital gain rates). AMT = excess over regular tax. The ISO portion is a deferral item that can generate a minimum tax credit later.

Exam traps

The standard deduction is not allowed for AMT.
SALT add-back creates AMT but no minimum tax credit (exclusion item).
Bonus depreciation is allowed for AMT; 200% DB on personal property is not (150% DB).
Qualified dividends and LTCG keep their 0/15/20% rates inside AMT.