Many people were left with a surprise in 2024 – AMT for the first time.

This came from a double whammy:

• New rules for AMT making it more onerous
• A rush to trigger capital gains before the 2/3 inclusion rate kicked in for capital gains

Of course, we now know that the 2/3 inclusion rate change did not happen. The aftermath is AMT, caused by 100% of a capital gain being taxed at a 20.5% rate.

Recovery Mission

For 2025, we have a recovery mission! The goal is twofold:

• Make sure, as far as possible, that AMT does not arise again in 2025
• Recover the extra tax paid in 2024

To do this, you need to:

• Project income and tax (especially AMT) for 2025
• Pay special attention to AMT issues
• Consider tax planning steps

Everyone likes a refund, and that is what will happen if you can recover AMT.

Planning

There are various planning ideas which can be useful, but first you need to understand the rules. Here are a few ideas.

1. Emphasize salary rather than dividends
2. Avoid capital loss carryover (only 50% deductible for AMT)
3. Reduce interest expense
4. Consider use of holding companies to realize capital gains

The first session of our 2025 Tax Seminar Series will focus on AMT planning for individuals and trusts. It will explain the rules, common situations where AMT will arise, and provide many planning ideas.

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