
<p style="text-align: right;"><a target="_blank" href="pdfs/featured_posts/2010tra-key.pdf"><img src="images/stories/pdf-icon.png" alt="pdf-icon" style="float: right;" height="15" width="15" /></a><a target="_blank" href="pdfs/featured_posts/2010tra-key.pdf">Download PDF</a></p>
<p style="text-align: justify;">On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “2010 Tax Relief Act”).  Among its many provisions, the 2010 Tax Relief Act provides a two-year respite for valuable tax breaks that would have been eliminated after 2010 by sunsetting tax rules.  These include favorable income tax rates, marriage penalty relief, favorable tax rates for long-term capital gains and qualified dividends, and liberal education-related tax breaks and credits.  The discussion also explains the 2010 Tax Relief Act’s new two-year “patch” for the alternative minimum tax (AMT).  However, unless Congress acts, the favorable rules explained below will sunset on December 31, 2012 and revert to their 2001 levels.</p>
<p style="text-align: center;"><strong>Reduced Individual Tax Rates Extended for Two Years</strong></p>
<p style="text-align: justify;">For tax years 2010 through 2012, the income tax rates for individuals are 10%, 15%, 25%, 28%, 33% and 35%. In addition, the size of the 15% tax bracket for joint filers and qualified surviving spouses is 200% of the 15% tax bracket for individual filers (the so-called marriage penalty relief).</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after Dec. 31, 2010, the rates were scheduled to rise to 15%, 28%, 31%, 36% and 39.6%, respectively; and the 15% tax bracket for joint filers and qualified surviving spouses was scheduled to drop to 167% of the 15% tax bracket for individual filers.</p>
<p style="text-align: justify;">To view the complete 2011 income tax tables see <a href="http://www.irs.gov/pub/irs-drop/rp-11-12.pdf">Rev. Proc. 2011-12</a></p>
<p style="text-align: center;"><strong>Increased Standard Deduction Amounts Extended for Two Years</strong></p>
<p style="text-align: justify;">For tax years 2010 through 2012, the basic standard deduction for a married couple filing a joint return remains at twice the basic standard deduction for an unmarried individual filing a single return.  Under pre-2010 Tax Relief Act law, for tax years beginning after Dec. 31, 2010, the standard deduction for married taxpayers filing jointly (and qualified surviving spouses) was to be only 167% of the standard deduction for single taxpayers.</p>
<p style="text-align: justify;">Under the 2010 Tax Relief Act, the basic standard deduction for 2011 (reflecting inflation adjustments) will be:</p>
<table style="width: 550px; height: 135px; float: left;" align="left" border="0" height="95" width="500">
<tbody>
<tr align="left">
<td align="left"><span style="font-size: 10pt;">Joint Return or Surviving Spouse</span></td>
<td align="left"><span style="font-size: 10pt;">$11,600 (up from $11,400 for 2010</span>)<br /></td>
</tr>
<tr>
<td align="left"><span style="font-size: 10pt;">Single (other than head of <br />household or surviving Spouse)</span></td>
<td align="left"><span style="font-size: 10pt;">$5,800 (up from $5,700 for 2010</span>)<br /></td>
</tr>
<tr>
<td align="left"><span style="font-size: 10pt;">Head of Household</span></td>
<td align="left"><span style="font-size: 10pt;">$8,500 (up from $8,400 for 2010</span><br /></td>
</tr>
<tr>
<td align="left"><span style="font-size: 10pt;">Married filing seperate returns</span></td>
<td align="left"><span style="font-size: 10pt;">$5,800 (up from $5,700 for 2010</span><br /></td>
</tr>
</tbody>
</table>
<p> </p>
<p style="text-align: justify;">For 2011, the additional standard deduction for married taxpayers 65 or over or blind will be $1,150 (up from $1,100 for 2010). For a single taxpayer or head of household who is 65 or over or blind the additional standard deduction for 2011 will be $1,450 (up from $1,400 for 2010).</p>
<p style="text-align: center;"><strong>3% / 80% Limitation Eliminated on Itemized Deductions for 2011 and 2012</strong></p>
<p style="text-align: justify;">Under the 2010 Tax Relief Act, the itemized deductions of higher-income taxpayers remain unlimited by the taxpayer’s adjusted gross income (“AGI”) through 2012, although separate limitations (floors) may apply to the particular deduction.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after Dec. 31, 2010, the total amount of itemized deductions was to be reduced (the “Pease limitation”) by 3% of the amount by which the taxpayer’s AGI exceeds a threshold amount ($169,550 for 2011), with the reduction not to exceed 80% of the otherwise allowable itemized deductions.</p>
<p style="text-align: center;"><strong>No Phase-Out of Personal Exemptions for 2011 and 2012</strong></p>
<p style="text-align: justify;">Under the 2010 Tax Relief Act, a high-income taxpayer’s personal exemptions are not phased out for 2011 and 2012 when AGI exceeds the inflation-adjusted threshold.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after Dec. 31, 2010, the total amount of personal exemptions (estimated to be $3,700 in 2011) that could be claimed by a taxpayer was to be reduced (personal exemption phaseout (PEP)) by 2% for each $2,500 (or portion thereof) by which the taxpayer’s AGI exceeds the applicable threshold (in 2011, $169,550 for unmarried individuals; $254,350 for married couples filing joint returns; $211,950 for heads of household). The phase-out rate was to be 2% for each $1,250 for married taxpayers filing separate returns.</p>
<p style="text-align: center;"><strong>Reduced Capital Gains and Qualified Dividends Rate Extended for Two Years</strong><em> </em></p>
<p style="text-align: justify;"><em>Capital gain</em>.  For tax years 2010 through 2012, the maximum rate of tax on the adjusted net capital gain of an individual is 15% for both regular tax and AMT purposes.  If the adjusted net capital gain would otherwise be taxed at a rate below 25% if it were ordinary income, it is taxed at a 0% rate.  That part of net capital gain attributable to unrecaptured section 1250 gain (i.e., gain attributable to real estate depreciation) is taxed at a maximum rate of 25%.  Net capital gain attributable to collectibles gain and section 1202 gain is taxed at a maximum rate of 28%.</p>
<p style="text-align: justify;">Under pre-Act law, for tax years beginning after Dec. 31, 2010, the maximum rate of tax on an individual’s adjusted net capital gain was to be 20%.  Any adjusted net capital gain which otherwise would be taxed at the 15% rate was to be taxed at a 10% rate.  In addition, any gain from the sale or exchange of property held more than five years that would otherwise have been taxed at the 10% capital gain rate would be taxed at an 8% rate.  Any gain from the sale or exchange of property acquired after 2000 and held for more than five years (that would otherwise have been taxed at a 20% rate) was to be taxed at an 18% rate.  Net capital gain attributable to unrecaptured section 1250 gain was to continue to be taxed a maximum rate of 25%.  Net capital gain attributable to collectibles gain and section 1202 gain was to continue to be taxed at a maximum rate of 28%.</p>
<p style="text-align: justify;"><em>Qualified dividend income</em>.  For tax years 2010 through 2012, for both the regular tax and AMT purposes, an individual’s qualified dividend income is taxed at the same rates that apply to net capital gain.  Thus, an individual’s qualified dividend income is taxed at a 15% and (for qualified dividend income, which otherwise would be taxed at a 10% or 15% rate if the special rates did not apply) at a 0% rate.</p>
<p style="text-align: justify;">Under pre-Act law, for tax years beginning after Dec. 31, 2010, dividends received by an individual were to be taxed at ordinary income tax rates.</p>
<p style="text-align: center;"><strong>Temporary Exclusion of 100% of Gain on Certain Small Business Stock</strong></p>
<p style="text-align: justify;">For 2010 and 2011, the 2010 Tax Relief Act allows a taxpayer to exclude all of the gain on the disposition of qualified small business stock acquired after September 27, 2010 and before January 1, 2011, and allows a taxpayer to exclude 75% of the gain from the disposition of such stock if it was acquired after February 17, 2009 and before September 28, 2010.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, the exclusion was to be limited to 50% of the gain on the disposition of stock acquired after December 31, 2010.</p>
<p style="text-align: center;"><strong>Liberalized Rules for Qualified Conservation ContributionsReinstated and Extended</strong></p>
<p style="text-align: justify;">The 2010 Tax Relief Act retroactively reinstates and extends, for 2010 and 2011, the 50% and 100% limitations on qualified conservation contributions of appreciated real property.  Accordingly, a taxpayer’s aggregate qualified conservation contributions (i.e., contributions of appreciated real property for conservation purposes) are allowed up to the excess of 50% of the taxpayer's contribution base over the amount of all other allowable charitable contributions (100% for qualified farmers and ranchers), with a 15-year carryover of such contributions in excess of the applicable limitation.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, these rules did not apply to any contribution made in a tax year beginning after December 31, 2009, and contributions made thereafter were to be subject to the otherwise applicable 30% limit for capital gain property (50% limit for qualified farmers and ranchers).</p>
<p style="text-align: center;"><strong>Expanded Child Tax Credit Extended for Two Years</strong></p>
<p style="text-align: justify;">For tax years beginning in 2010 and running through 2012, individuals may claim a maximum $1,000 child tax credit under IRC § 24 for each qualifying child under age 17 that the taxpayer can claim as a dependent.  The amount of the allowable credit is reduced (not below zero) by $50 for each $1,000 (or fraction thereof) of modified AGI above: $110,000 for joint filers, $75,000 for unmarried individuals, and $55,000 for married taxpayers filing separately.  The child tax credit can offset both the regular tax and AMT.  The child tax credit is refundable, but only to the extent of the greater of: (1) 15% of taxable earned income above $3,000 (as adjusted for inflation), or (2) for a taxpayer with three or more qualifying children, the excess of his social security taxes for the tax year over his earned income credit for the year.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after Dec. 31, 2010, the maximum credit was to drop from $1,000 to $500, and the credit was not to be allowed against AMT.  In addition, more restrictive rules were to apply to refundable child credit.</p>
<p style="text-align: center;"><strong>Expanded Adoption Credit and Employer-Provided Adoption Assistance</strong></p>
<p style="text-align: justify;">There is a maximum adoption credit of $13,170 for 2010 ($13,360 for 2011) per eligible child (both special needs and non-special needs adoptions) under IRC § 36C; and for employer-provided adoption assistance a maximum exclusion of $13,170 ($13,360 for 2011) per eligible child (both special needs and non-special needs adoptions) under IRC § 137.  These amounts are adjusted annually for inflation.  The benefit is phased out for taxpayers with modified AGI over $182,520 in 2010 ($185,210 in 2011), adjusted for inflation annually, and is fully eliminated when modified AGI reaches $222,520 in 2010 ($225,210 in 2011).</p>
<p style="text-align: justify;">Under the 2010 Tax Relief Act, the expanded adoption credit and exclusion from income for employer-provided adoption assistance are extended for one year, through 2012, but the changes made by the Patient Protection and Affordable Health Care Act (enacted in March of 2010) to the adoption credit for 2010 and 2011 (relating to the $1,000 increase in the maximum credit and the refundability of the credit) are not extended.  Thus, for 2012, the maximum benefit is $12,170 (indexed for inflation after 2010), and is phased out ratably for taxpayers with modified AGI between $182,520 and $222,520 (indexed for inflation after 2010).</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after December 31, 2011, the adoption credit and employer-provided adoption assistance exclusion were to be available only to special needs adoptions and the maximum credit and exclusion was to be reduced by more than half to $6,000.  The phase-out range was to be reduced to between $75,000 and $115,000.  The maximum credit, exclusion, and phase-out range were not indexed for inflation.</p>
<p style="text-align: center;"><strong>Expanded Employer-Provided Child Care Tax Credit</strong></p>
<p style="text-align: justify;">Under IRC § 45F, a tax credit for employer-provided child care applies for tax years 2010 through 2012.  It is equal to the sum of the following expenses (up to $150,000) for the tax year:</p>
<p style="text-align: justify; padding-left: 60px;">1) 25% of qualified child care expenses, which are expenses to buy, build, rehabilitate, or expand property to be used as part of an employer’s qualified child care facility, for which a deduction for depreciation (or amortization) is allowable, and which is not part of the taxpayer’s (or an employee’s) principal residence. Qualifying child care expenses also include operating costs of a taxpayer’s qualified child care facility (including costs related to employee training, scholarship programs, and to providing increased compensation to employees with higher levels of child care training), and amounts paid under a contract with a qualified child care facility to provide child care services to the taxpayer’s employees; and</p>
<p style="text-align: justify; padding-left: 60px;">2) 10% of qualified child care resource and referral expenses (i.e., amounts paid or incurred under a contract to provide child care resource and referral services to an employee).</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after December 31, 2010, this child care credit was no longer going to apply.</p>
<p style="text-align: center;"><strong>Expanded Dependent Care Tax Credit Extended Two Years</strong></p>
<p style="text-align: justify;">A dependent care tax credit may be claimed in 2010, 2011 and 2012 by an individual who has one or more qualifying individuals and incurs employment-related expenses enabling him or her to be gainfully employed.  For 2010, the maximum dependent care tax credit is $1,050 (35% of up to $3,000 of eligible expenses) if there is one qualifying individual, and $2,100 (35% of up to $6,000 of eligible expenses) if there are two or more qualifying individuals.  The 35% credit rate is reduced (but not below 20%) by one percentage point for each $2,000 (or fraction thereof) of AGI above $15,000.  Thus, the credit percentage is reduced to 20% for taxpayers with AGI over $43,000.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act-law, for tax years beginning after December 31, 2010, the level of the credit was to be reduced: the maximum credit percentage was to drop from 35% to 30% and the AGI-based percentage reduction was to begin at $10,000 instead of $15,000.  The creditable expense was to drop from $3,000 to $2,400 (for one qualifying individual) and from $6,000 to $4,800 (for two or more).</p>
<p style="text-align: center;"><span new="New" style="font-size: 12pt;"> </span><strong>Nontaxable IRA Transfers to Eligible Charities Reinstated and Extended</strong></p>
<p style="text-align: justify;">The 2010 Tax Relief Act retroactively reinstates and extends the charitable IRA distribution provisions of IRC § 408 for tax years 2010 and 2011.  Under this provision, taxpayers who are age 70 1/2 or older can make tax-free distributions to a charity from an IRA of up to $100,000.  These distributions are not subject to the charitable contribution percentage limits since they are neither included in gross income nor claimed as a deduction on the taxpayer’s return.  In addition, a taxpayer can elect to treat a charitable IRA distribution made in January of 2011 as if it were made on December 31, 2010, allowing the distribution to (1) count against the 2010 $100,000 limitation, and (2) be used to satisfy the taxpayer’s minimum distribution requirement for 2010.</p>
<p style="text-align: center;"><strong>Numerous Education Incentives Extended Two Years</strong></p>
<p style="text-align: justify;"><em>American opportunity tax credit</em>.  For tax years 2010 through 2012, individuals may claim an American opportunity tax credit (“AOTC”) under IRC § 25A equal to 100% of up to $2,000 of qualified higher-education tuition and related expenses (including course materials), plus 25% of the next $2,000 of expenses paid for education furnished to an eligible student in an academic period for a maximum credit of $2,500 a year for each eligible student.  For 2010, the availability of the credit phases out ratably for taxpayers with modified AGI of $80,000 to $90,000 ($160,000 to $180,000 for joint filers).  The AOTC (which expanded the credit available under the Hope Scholarship Credit) is allowed for each of the first four years of the student’s post-secondary education in a degree or certificate program.  The credit can be claimed against AMT liability; and 40% of the otherwise allowable AOTC is refundable (unless the taxpayer claiming the credit is a child under age 18 or a child under age 24 who is a student providing less than one-half of his or her support, who has at least one living parent, and does not file a joint return).</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after December 31, 2010, instead of the AOTC an individual was to be able to claim a Hope credit equal to 100% of the first $1,200 (as inflation adjusted) of qualified higher-education tuition and related expenses (not including course material), plus 50% of the next $1,200 (as inflation-adjusted) of expenses paid for education furnished to an eligible student in an academic period for a total maximum Hope credit of $1,800.  For each eligible student, the Hope credit would be allowed only for expenses paid for the first two years of the post-secondary education, and it was to phase out ratably for taxpayers with lower specified (inflation adjusted) modified AGI.</p>
<p style="text-align: justify;"><em>Exclusion for scholarships</em>.  For tax years 2010 through 2012, a qualified individual can exclude from income a qualified scholarship or qualified tuition reductions under IRC § 117.  These exclusions generally do not apply to any amounts received by a student as payment for teaching, research, or other services as a condition for receiving the scholarship or tuition reduction.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after December 31, 2010, this exception to the no payment for teaching, research, or other services rule for the National Health Service Corps (NHSC) Scholarship Program and the F. Edward Hebert Armed Forces Health Professions Scholarship and Financial Assistance Program (Armed Forces Scholarship Program) was no longer going to apply.</p>
<p style="text-align: justify;"><em>Employer-provided educational assistance</em>.  Under IRC § 127, for tax years 2010 through 2012, an employee may exclude educational assistance provided under an employer’s qualified educational assistance program, up to an annual maximum of $5,250.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after December 31, 2010, this specific exclusion for employer-provided educational assistance was no longer to apply, so that educational assistance would be excludable from gross income only if it qualifies as a working condition fringe benefit (i.e., the expenses would have been deductible as business expenses if paid by the employee; such expense must be related to the employee’s current job).</p>
<p style="text-align: justify;"><em>Above-the-line student loan interest deduction</em>.  For tax years 2010 through 2012, individuals can deduct a maximum of $2,500 annually for interest paid on qualified higher education loans under IRC § 221.  For 2010, the deduction phases out ratably for taxpayers with modified AGI between $60,000 and $75,000 ($120,000 and $150,000 for joint returns).</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, for tax years beginning after December 31, 2010, the phaseout ranges were to revert to a much lower base level of $40,000 to $55,000 ($60,000 to $75,000 for joint returns), adjusted for inflation occurring since 2002.  In addition, the interest was not to be deductible beyond the first 60 months that interest payments are required.</p>
<p style="text-align: center;"><strong>Above-the-Line Deduction for Educator Expenses Reinstated and Extended</strong></p>
<p style="text-align: justify;">The 2010 Tax Relief Act retroactively extends the educator expense deduction for two years so that it applies to expenses paid and incurred in tax years 2010 and 2011.  Accordingly, eligible elementary and secondary school teachers may claim an above-the-line deduction for up to $250 per year of expenses paid or incurred for books, certain supplies, computer and other equipment, and supplementary materials used in the classroom.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, this minimal educator expense deduction did not apply for tax years beginning after December 31, 2009.</p>
<p style="text-align: center;"><strong>Above-the-Line Deduction for Higher Education Expenses Reinstated and Extended</strong></p>
<p style="text-align: justify;">The 2010 Tax Relief Act retroactively reinstates and extends the qualified tuition deduction for 2010 and 2011.  Accordingly, a taxpayer may claim an above-the-line deduction for qualified tuition and related expenses for higher education paid by that taxpayer during the tax year, subject to applicable AGI and dollar limits.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, this deduction was not available for tax years beginning after December 31, 2009.</p>
<p style="text-align: center;"><strong>State and Local Sales Tax Deduction Reinstated and Extended</strong></p>
<p style="text-align: justify;">The 2010 Tax Relief Act retroactively extends for tax years 2010 and 2011, the ability for taxpayers to deduct state and local general sales and use taxes instead of state and local income taxes.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, this deduction was unavailable for tax years beginning after December 31, 2009.</p>
<p style="text-align: center;"><strong>Treatment of Mortgage Insurance Premiums as <br />Deductible Qualified Residence Interest Extended</strong></p>
<p style="text-align: justify;">Mortgage insurance premiums paid or accrued by a taxpayer in connection with acquisition indebtedness with respect to the taxpayer’s qualified residence are treated as deductible qualified residence interest, subject to a phase-out based on the taxpayer’s AGI.  The 2010 Tax Relief Act retroactively reinstates and extends this provision for tax years 2010 and 2011.</p>
<p style="text-align: justify;">Under pre-2010 Tax Relief Act law, this provision only applied to premiums paid or accrued before January 1, 2011.</p>
<p style="text-align: center;"><strong>Boosted AMT Exemption Amounts for 2010 and 2011</strong></p>
<p style="text-align: justify;">The alternative minimum tax (“AMT”) is the excess, if any, of the tentative minimum tax for the year over the regular tax for the year.  In arriving at the tentative minimum tax, an individual begins with taxable income, modifies it with various adjustments and preferences, and then subtracts an exemption amount (which phases out at higher income levels).  The result is alternative minimum taxable income (“AMTI”), which is subject to an AMT rate of 26% or 28%.</p>
<p style="text-align: justify;"><span new="New" style="font-size: 12pt;"><br style="page-break-before: always;" clear="all" /></span></p>
<p style="text-align: center;"><strong>AMT Exemption Amount Comparison Chart</strong></p>
<table style="float: left;" border="0" height="176" width="539">
<tbody>
<tr>
<td style="border: 1px solid #ffffff;">
<p><span style="font-size: 10pt; font-family: arial,helvetica,sans-serif;"><br /></span></p>
</td>
<td style="border: 1px solid #ffffff;">
<p><span style="font-size: 10pt; font-family: arial,helvetica,sans-serif;">Pre-2010 <br />Tax Relief <br />Act Law</span></p>
</td>
<td style="border: 1px solid #ffffff;">
<p><span style="font-size: 10pt; font-family: arial,helvetica,sans-serif;">2010 <br />Tax Relief <br />Act 2010</span></p>
</td>
<td style="border: 1px solid #ffffff;">
<p><span style="font-size: 10pt; font-family: arial,helvetica,sans-serif;">2010 <br />Tax Relief <br />Act 2011</span></p>
</td>
</tr>
<tr>
<td style="border: 1px solid #ffffff;">
<p><span style="font-size: 10pt; font-family: arial,helvetica,sans-serif;">Unmarried Individuals</span></p>
</td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$33,750</span></p>
<br /></td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$47,450</span></p>
<br /></td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$48,450</span></p>
<br /></td>
</tr>
<tr>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">Married Couples Filing Jointly <br />and Surviving Spouses</span></p>
</td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$45,000</span></p>
<br /></td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$72,450</span></p>
<br /></td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$74,450</span></p>
<br /></td>
</tr>
<tr>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">Married Individuals Filing <br />Separately</span></p>
</td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$22,500</span></p>
<br /></td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$36,225</span></p>
<br /></td>
<td style="border: 1px solid #ffffff;">
<p><span new="New" style="font-size: 10pt;">$37,22</span></p>
</td>
</tr>
</tbody>
</table>
<p style="text-align: justify;"> </p>
<p style="text-align: justify;">Absent future legislation (e.g., another AMT “patch”), the reduction in the AMT exemption amounts that, under pre-2010 Tax Relief Act law, was scheduled to apply to tax years beginning after 2009, will apply to tax years beginning after 2011.  This means that in 2012, without further “patches” or broader changes to the AMT generally, the AMT exemption amounts will drop to: $33,750 for unmarried individuals who are not surviving spouses; $45,000 for married couples filing jointly and surviving spouses; and $22,500 for married individuals filing separately.</p>
<p style="text-align: center;"><strong>Personal Nonrefundable Credits Offset AMT and Regular Tax for 2010 and 2011</strong></p>
<p style="text-align: justify;">For tax years beginning before 2010, a number of personal credits were nonrefundable (i.e., the dependent care credit, the credit for the elderly and disabled, the child credit, the credit for interest on certain home mortgages, the Hope Scholarship and Lifetime Learning credits, the credit for savers, the credit for certain non-business energy property, the credit for residential energy efficient property, the credit for certain plug-in electric vehicles, the credit for alternative motor vehicles, the credit for new qualified plug-in electric drive motor vehicles, and the D.C. first-time homebuyer credit) and allowed only to offset a taxpayer’s regular income tax liability, not the AMT.</p>
<p style="text-align: justify;">Under the 2010 Tax Relief Act, for tax years 2010 and 2011, an individual may offset his or her entire regular tax liability and AMT liability by the nonrefundable personal credits.</p>
<p style="text-align: justify;">The rule allowing nonrefundable personal credits to reduce the AMT (as well as regular tax) benefits middle income individuals who: (a) have low taxable income (and thus a low regular tax), e.g., because of a large number of personal exemptions; (b) are subject to the AMT because personal exemptions (as well as the standard deduction and certain itemized deductions) generally are not allowed in computing the AMT; and (c) have substantial nonrefundable personal credits.</p>