Reference no: EM133020099

Question - Gabriel, age 40, and Emma, age 33, are married with two dependents. They recorded AGI of $250,000 in 2020 that included net investment income of $3,000 and gambling winnings of $2,500. The couple incurred the following expenses during the year (all of which resulted in itemized deductions for regular income tax purposes).

Medical expenses (before 10%-of-AGI floor) $12,000

State income taxes 5,800

Real estate tax 9,100

Interest on personal residence 18,600

Interest on home equity loan (proceeds were used to remodel the couple's kitchen) 9,800

Investment interest expense 4,500

Charitable contribution (cash) 14,200

Required -

-What is Gabriel and Emma's AMT adjustment for itemized deductions in 2020? Is it positive or negative?

-Gabriel and Emma also earned interest of $5,000 on private activity bonds that were issued in 2015. They borrowed money to buy these bonds and paid interest of $3,900 on the loan. Determine the effect on AMTI.