what is tax preferenceSolutionTax preferences are measures o

what is tax preference

Solution

Tax preferences are measures of the government under which different items are exempted from paying taxes. Tax preference items are that type of income that are tax free and hence triggers AMT (alternative minimum tax) for the taxpayers.

Examples of tax preference items are deductions for accelerated depreciation, excess intangible drilling costs, capital gains from exercise of stocks etc.

Tax preference items are added to the AMT.