A, age 25, had a taxable capital gain, which was not an excluded amount, from disposing of Opco shares, resulting in Part I taxes, including TOSI, of $50,000 for Year 1, but with the AMT for Year 1 amounting to $70,000. In Year 2, A had regular Part I tax payable of $60,000 (of which $50,000 was attributable to TOSI) and a lower AMT amount (of $40,000). Is A precluded from deducting the $20,000 AMT carryforward in Year 2 because A’s Part I taxes for Year 2, excluding TOSI taxes, of $10,000 is less than the $40,000 AMT payalbe for Year 2?
In essentially confirming this result, CRA indicated that the Year-2 AMT credit calculated under s. 120.2(1) is the lesser of the AMT carryforward amount of $20,000 and any excess of the modified Part I tax amount (excluding TOSI taxes) for Year 2 - of $10,000 - over the s. 127.51 AMT minimum amount as described in s. 120.2(1)(b), i.e., nil.