The Essay is organized as follows: Part I reveals the lack of any explanatory guidance or commentator attention to the 2011 IRS instruction apparent radical change to the AMT Computational Formula that is hiding in plain sight. Next, Part II examines the AMT Computational Formula prior to the TAMRA Amendment. Also included is a discussion of the mechanics of the Regular Tax Computational Formula, an analysis of the AMT correlative adjustments that created parity with the Regular Tax Computational Formula and finally an analysis of the 1987 IRS instruction explaining the AMT Computational Formula. Then, in Part III, this Essay’s TAMRA Amendment thesis is articulated postulating that the purpose and effect of the TAMRA Amendment was to expand the scope of AMT gross investment income to include any investment income preference subject to appropriate AMT adjustments. In Part IV, the Essay explores the significance of the required correlative adjustments in determining the amount of tax preference investment income includible in AMT gross investment income per the TAMRA Amendment. It does so with an analysis of a hypothetical scenario involving net capital gain from the sale of stock acquired through the exercise of an investment stock option. Comparing the outcome pursuant to the 1988 IRS instruction with a TAMRA Amendment required adjustment to the 1987 IRS instruction lacking that adjustment reveals that the former instruction closes a pre-TAMRA Amendment loophole. Then, in Part V, the Essay provides an in-depth examination of the 2011 IRS instruction in apparently creating a nonsensical and punitive version of the AMT Computational Formula. Part VI highlights the challenges to tax preparers due to the complexity of Form 6251 as reinforcing the necessity and importance of clear and concise IRS instructions.
To read this Essay, please click here: How Did A Rogue 2011 IRS Instruction Produce A Nonsensical and Punitive AMT Investment Interest Expense Deduction Computational Formula and Nobody Knows It?