a federal tax designed to assure that a person cannot avoid paying income tax through the use of various tax shelters. The alternative minimum tax applies when the calculated amount is higher than the regular tax otherwise payable.
A federal income tax applied to individuals and corporations that take advantage of tax benefits in amounts that are large relative to their incomes. Investors subject to AMT lose the benefits of the tax exemption for interest paid on otherwise tax-exempt securities.
For income tax purposes, this is a tax created to ensure that high-income individuals, corporations, trusts and estates pay at least some minimum income tax regardless of deductions, credits or exemptions. (See your tax advisor for more information).