For alternative minimum tax (“AMT”) and basic alternate tax (“BAT”), taxpayers can only claim certain expenses specified in the Code. Not all expenses claimed for the regular income tax computation will be deductible for AMT and BAT purposes. Nevertheless, if the taxpayer includes an agree upon procedures report, a compliance report, or audited financial statements along with the income tax return, it will be allowed to claim the same expenses claimed for regular income tax purposes.
For the AMT computation the following expenses are allowed:
- The amount of exempt income received by an investment registered company
- 125% of the wages reported and paid
- Services directly related to the business operations of the individual
- 50% of the federal self-employed contribution paid
- Contributions to health or accident plans
- Utilities
- Advertising expenses
- Insurance expenses
- Depreciation
- Interests
- Taxes
- Contributions to trust or annuities plan
- Income from agriculture
For the BAT computation the following expenses are allowed:
- 125% of salaries reported and paid
- Services directly related to the business operations
- Rent
- Contributions to health or accident plans
- Utilities
- Advertising expenses
- Insurance expenses
- Depreciation
- Interests
- Taxes
- Uncollectible debts
- Contributions to trust or annuities plan
- Donations
- Income from agriculture
