Daly’s firm runs calculations for clients based on the interaction of the alternative minimum tax, Pease elimination and the SALT cap. “Many individuals up to income levels of approximately $700,000 may be in refund position under [reform],” Daly said. “Many people believe that their tax liability will come up since they won’t be receiving the benefit of real estate taxes and SALT. If you were subject to the AMT ... elimination of the Pease may actually be a benefit.”
How much do wealthy clients have to consider other factors when it comes to Pease limits in the future?
“The AMT works to recalculate taxes when the wrong kind of deductions are taken on a return. SALT has also long been a preference item and also all itemized miscellaneous deductions. All these items are added back to taxable income to calculate AMT,” Olbricht said. “All of my high-net-worth taxpayers that have an AMT liability also have higher taxes and maybe miscellaneous items. So the less of these items they deduct, the less AMT tax.”
Crabtree countered that for wealthy clients the Pease repeal interacts little with AMT or the new SALT deduction.