Day 764
DIET
Typical bodybuilder diet. Loading up on carbs and protein. I need to eat more because I'm losing weight at an alarming pace. My activity levels is way too high.
EXERCISES
Hit the gym with box jumps, jump rope and a nice dose of weighted abdominals. Planks and side plank circuits are possibly the greatest abdominal exercise ANYONE can do. You can feel the muscles tighten up when doing then.
EXTRA ACTIVITIES
Got two calls from fellow longboarders to hit the streets. It felt amazing to shred with my friends late at night. My new board feels like a Cadillac, pumps like a dream and rides smooth as butter. I almost didn't go out because I wanted to study more CPA but finding balance in life is also very important.
COMMENTS
The days pass by so fast. The minutes feel like seconds. Senior year is passing too quickly! I need to make sure not to fall into a study coma and go out more. I created this blog to help myself achieve a balance and I will not forget this.
INTERESTING CPA TIDBITS OF THE DAY
I need to discover the logic behind the topics that confuse me the most or the topics that I am most unfamiliar with. Therefore... today's topic is the Alternative Minimum Tax (AMT) for Individuals and Corporations. AMT was created so taxpayers pay a "minimum" amount of tax to the government. The government feels certain individuals are not paying enough tax and this floor helps the government capture some more tax. Personally, I find this tax fairly annoying but it makes sense since the tax rules in general penalize the taxpayer rather then help.
I will first start with individuals. To figure out AMT, we start with regular taxable income. From there, we add or subtract adjustments and then add in tax preference items to come to the alternative minimum taxable income. Adjustments can be further broken down into timing and permanent classifications. For timing issues, the AMT chooses to use a "slower" period to depreciate or recognize deductions. This means we need to recapture some of the depreciation deductions or similar items and add it back to our taxable income to increase our tax base. This makes sense since the government is trying to recognize more tax upfront then later. Timing also signifies that in the long run, the slower depreciation method will deduct more than MACRS. This makes sense since depreciation will always remove the entire basis in some period of time, so the total depreciation taken overtime will be the same no matter what method you use. For timing adjustments, this applies to personal property depreciation, % completion and income recognition upon exercise of incentive stock options rather than upon sale. Permanent adjustments are fairly simple to understand, these are adjustments that the government thinks a wealth taxpayer should not take certain deductions or exemptions. For permanent adjustments, we must add back personal exemptions, standard deductions, tax deductions, 2% miscellaneous deductions, 2.5% additional floor limit for medical expenses, and home mortgage interest if used for any purpose other than to buy, build, or improve the taxpayer's principal or second home. Now, switching gears to tax preferences, we see two items. Excess accelerated over straight-line depreciation for real and leased personal property placed in service before 1987 and tax-exempt interest on certain private activity bonds less related expenses are included back to taxable income. Private activity bonds are considered used for private business if at least 10% of the proceeds are used for this purpose.
After looking at the adjustments and tax preferences, we get the alternative minimum taxable income (AMTI). We then subtract out an exemption of (70,950 MFJ or 46,700 S which is reduced by 25% of AMTI in excess of 150,000 MFJ or 112,500 S). We take this minimum tax base and multiply by the tax rate of 26% or 28% if your base is > 175,000. Finally we can subtract out AMT foreign tax credits and get our tentative minimum tax. We only recognize AMT by the amount the tentative minimum tax exceeds regular tax liability. This makes sense since AMT signifies a floor. If regular tax exceeds AMT, we don't recognize any AMT.
Another thing to note is the a minimum tax credit is created for timing difference to offset regular tax liability in the future. This is logical since timing differences will negate itself in the future. If the regular tax exceeds the AMT tax in a given year and you have unused minimum tax credit (from timing adjustments), you can utilize the difference as a credit against regular tax.
AMT for corporations is supposedly easier, but I find it to be more complicated because of a third adjustment. I will continue this in tomorrow's post since I need to run to class now. CPA review class too haha.