What is the AMT exemption amount for corporations when AMTI exceeds $150,000?

The AMT exemption amount for corporations is subject to a reduction based on the level of Alternative Minimum Taxable Income (AMTI). Specifically, when AMTI exceeds $150,000, the exemption amount is reduced by 25% of the amount by which AMTI exceeds that threshold.

This means that as AMTI increases beyond $150,000, the corporation loses part of its AMT exemption, calculated at a rate of 25% for every dollar over the $150,000 limit. The initial exemption amount is $40,000, but this is diminished based on the corporation's income level. Thus, if AMTI exceeds $150,000, the correct answer reflects this reduction structure, confirming that the AMT exemption is indeed $40,000 reduced by 25% of the excess AMTI.

Understanding these mechanics of the AMT exemption helps in strategic tax planning for corporations and enables them to better anticipate their tax obligations as income fluctuates.