Problem - Pat, who is age 66 and single with no dependents, received a salary of $90,000 in 2016. She earned interest income of $1,000, dividend income of $5,000, gambling winnings of $4,000, and interest income from private activity bonds (issued in 2006) of $40,000. The dividends are not qualified dividends. The following additional information is relevant.
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Medical expenses (before 7.5%-of-AGI floor)
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$12,000
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State income taxes
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4,100
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Real estate taxes
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2,800
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Mortgage interest on residence
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3,100
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Investment interest expense
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1,800
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Gambling losses
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5,100
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a. Compute Pat's taxable income and AMTI.
b. Determine if Pat's AMT exemption will be limited.