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Tax Preference Item Meaning & Definition

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Definition of Tax Preference Item

Tax Preference Item is an item that receives preferential tax treatment and must be added back into income when calculating an investor’s alternative minimum tax.

Applying "Tax Preference Item" to Securities Exams:

Certain items may need to be added back to high income earners AMT. These items may include interest payments from private purpose municipal bonds and excess intangible drilling costs from oil and gas interests.

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