For Alejandro's AMT calculations, what amount of the AMT exemption can he subtract from his AMTI of $260,000?

To determine the amount of the AMT (Alternative Minimum Tax) exemption that Alejandro can subtract from his AMTI (Alternative Minimum Taxable Income) of $260,000, it is crucial to understand how the AMT exemption works and the income thresholds associated with it.

For the year 2023, the AMT exemption amount phases out for individuals with an AMTI over certain thresholds. The exemption amount is generally $81,300 for single filers, but this amount is reduced by 25% of the amount by which a taxpayer’s AMTI exceeds a defined threshold. The threshold for single taxpayers is $578,150.

Since Alejandro's AMTI of $260,000 is below the threshold, he is entitled to the full exemption amount of $81,300. The amount of the AMT exemption that he can subtract from his AMTI does not reduce since he does not exceed the income threshold at which the exemption begins to phase out.

Thus, the correct answer of $126,500 is not accurate in this context since it's above the maximum exemption limit, which means the right amount Alejandro can subtract from his AMTI is indeed $81,300, reflecting his eligibility for the full exemption without any reduction for AMTI exceeding the