What is a Tax Preference Item?
Tax preference items are any taxable transaction or asset that would make a taxpayer subject to an alternative minimum tax. Essentially, a tax preference item is designed to ensure that the task of paying taxes includes organizations that usually have a wide range of deductions, exemptions and credits. The item is added back into the adjusted gross income, thus creating a higher amount that is subject to taxes. All taxpayers are potential candidates for the application of a tax preference item. Individuals who have extremely high levels of income may be subject to the inclusion of items on the tax return. The source of the income is not really much of a factor. For example, the individual may receive a lucrative salary, receive profits from investments, and also have other sources of taxable income that add up to a considerable amount of annual revenue. Along with individuals, corporations may also be subject to a tax preference item on the return. This will depend on the amount of exe
” Tax preference items are any taxable transaction or asset that would make a taxpayer subject to an alternative minimum tax. Essentially, a tax preference item is designed to ensure that the task of paying taxes includes organizations that usually have a wide range of deductions, exemptions and credits. The item is added back into the adjusted gross income, thus creating a higher amount that is subject to taxes. . All taxpayers are potential candidates for the application of a tax preference item. Individuals who have extremely high levels of income may be subject to the inclusion of items on the tax return. The source of the income is not really much of a factor.
