Difference between taxable income and alternative minimum taxable income:

• Your regular federal income tax liability is calculated using taxable income, while AMTI is calculated using AMTI.
• Adjustments and preferences that are not considered in regular taxable income are included in AMTI, which could lead to a higher taxable amount for AMT purposes.
• AMTI calculation does not consider deductions and exemptions that reduce taxable income, which results in a wider tax base.

Here is an example to understand taxable income and alternative minimum taxable income:

Which action won't cause a difference between taxable income and alternative minimum taxable income (AMTI)?

To calculate AMTI, the taxpayer begins by calculating their regular taxable income and then adds and subtracts various adjustments and preference items. Income items that are treated differently for regular tax purposes and AMT purposes are called alternative minimum tax (AMT preference items). Ordinary taxable income does not include preference items, but AMTI does. As a result, AMT preference items are included in AMTI calculations by adding them to taxable income. Corporate bonds' interest is a part of taxable income and AMTI.

Answer: In the event that a taxpayer earned $5,000 in interest on corporate bonds, there would be no distinction between taxable income and alternative minimum taxable income (AMTI).

This is an explanation using an example:

Let's imagine Alex is a taxpayer with the following income sources:
$50,000 salary ;The interest on corporate bonds is $5,000.

Income that is taxable regularly:

The sum of Alex's salary and interest income would constitute his regular taxable income. With a salary of $50,000 and an interest rate of $5,000, the total amount is $55,000. AMTI stands for Alternative Minimum Taxable Income

Certain items that are deductible under the regular tax system are re-added to the taxable income for AMT purposes. Those items do not include the interest on corporate bonds.