Retiring farmers believe the capital gains exemption takes care of everything, but it doesn’t. The AMT can still take a big chunk out of your returns
by MIKE MULHERN
When Dan and Diane Harkin sold their Winchester area farm last December, they expected their capital gains exemption would take care of any tax. They were wrong. When the dust cleared, the Harkins were hit with something called the Alternative Minimum Tax (AMT). Their tax bill was about $32,000.
The AMT has been around since 1986. It was introduced to address concerns that some individuals and trusts with high gross incomes paid little or no income tax, but the Harkins didn’t see themselves falling into the high-earning category.