I'm going to get smacked on AMT for 2006. Anyone know ways of decreasing AMT? I'm a sole-proprietor right now in CA, does changing your entity offer any shield from AMT? Any help would be appreciated!
Practical methods of reducing your AMT liability in a given year primarily have to do with timing certain AMT triggers, such as cap. gains and estimated state tax payments. In addition, charitable contributions are exempt from AMT and so boosting them helps. The only good news is that depending on what triggered your AMT, you may be able to claim AMT credit against your income taxes paid in future years. The bad news is that such carry-forward typically doesn't apply to the AMT caused by those triggers that lend themselves to timing. There's a good, hands-on overview of the various issues involved here (make sure to continue to pp. 2-5): http://www.fairmark.com/amt/amt101.htm Also see the "hot topic" link at the top, for future planning.