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Interest and AMT taxpayers

Q

Why are some tax-free municipal bonds subjected to the Alternate Minimum Tax? Shouldn’t they all be tax free?

E.K., Florida

A

James A. Klotz responds:

The interest from municipal bonds, issued for “private purposes” — such as airports, housing, etc. — is tax-free for conventional taxpayers, but  taxable for AMT taxpayers.

May 4, 2007

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