Drew Edmundson wrote:

- quote -

Correct. I was suggesting an overall approach to problems
like this, although it might have sounded like a software
specific comment.

MTW

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"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

original question about how to do the MAGI calculation for
AMT purposes. Not to the approach OrrTax took - ignore a
known error which they know how to fix, just fix it next
year.

--
Drew Edmundson, CPA (NC)

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Drew Edmundson wrote:

- quote -

When I worked as a consultant to one of the tax software
companies in the early 1990s, there was always lots of
"water cooler" talk about issues like this. My comment was
usually something like, "Have we received any comments from
users to indicate that the IRS understands or cares about
this problem?" <g
My solution (consistent with professional ethics when
uncertainly or complexity prevails) would be to make a
"reasonable estimate" of the number and move on to other
issues. I'm not belittling the problem; I'm just adding a
perspective. <g
MTW

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:

- quote -

I guess no one is following this thread but just in case ...

I have spoken to OrrTax support and they said the failure to
calculate the regular MAGI is a known issue. They learned
of it during tax season and plan to fix it next year. This
is not the level of support I expect so I won't be
considering them any longer.

--
Drew Edmundson, CPA (NC)

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snipped it all.

I have now also looked at Orrtax. Their calculation is
rather odd. They agree with Lacerte, UltraTax and Taxwise
about how to calculate MAGI-AMT but make no attempt to
calculate MAGI-Regular. So there is not way to be "sure"
that they believe MAGI-AMT=MAGI-Regular but they calculate
MAGI-AMT to what it would be for regular tax purposes, if
they made such a calculation.

My head hurts :/

--
Drew Edmundson, CPA (NC)

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I am looking at various tax software packages and have
discovered that they have differing philosophies on
calculating modified adjusted gross income (MAGI) for
purposes of allowable passive activity losses under the AMT.
If the software makes this calculation (Drake does not but
says they will for 2004) then they do so on a Form 8582-AMT.

Some take the position that MAGI for form 8582-Regular =
MAGI for form 8582-AMT. This seems to be based on
Regulation 1.55-1(b) which says:

(b) Items based on adjusted gross income or modified
adjusted gross income.

In determining the alternative minimum taxable income of a
taxpayer other than a corporation, all references to the
taxpayer's adjusted gross income or modified adjusted gross
income in determining the amount of items of income,
exclusion, or deduction must be treated as references to the
taxpayer's adjusted gross income or modified adjusted gross
income as determined for regular tax purposes.

---- end quoted text

Packages taking this position are: UltraTax, Lacerte (but
personally unverified), and TaxWise.

Intuit Proseries (note Intuit also owns Lacerte) takes the
position that MAGI for form 8582-AMT=MAGI for form
8582-regular but with the adjustments for form 6251, lines
9-17 and 19-26 less lines 7 and 27. This seems to be based
on Code Section 58(b) which says:

(b) Disallowance Of Passive Activity Loss

In computing the alternative minimum taxable income of the
taxpayer for any taxable year, section 469 shall apply,
except that in applying section 469--

(1) the adjustments of sections 56 and 57 shall apply,

(2) the provisions of section 469(m) (relating to phase-in
of disallowance) shall not apply, and

(3) in lieu of applying section 469(j)(7), the passive
activity loss of a taxpayer shall be computed without regard
to qualified housing interest (as defined in section 56(e)).

---- end quoted text

Finally one package (Taxworks) seems to straddle the line.
It makes most of the adjustments for form 6251 but not all.
For example it ignores the state refund (line 7), large
partnership adjustment (line 15), and qualified small
business stock (line 12).

Apparently Taxworks is wrong since it doesn't follow either
rule but who is right? I can't find any other IRS guidance
on this issue. The IRS discusses 1.55-1(b) in an MSSP but
doesn't discuss the MAGI calculation.

TIA

--
Drew Edmundson, CPA (NC)

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