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How Can Interest on a Private Activity Bond Issued in 2008

question 40

Essay

How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?


Definitions:

Business Judgment Rule

A legal principle that protects corporate directors and officers from liability for decisions made in good faith and in the best interests of the corporation, even if the decisions are ultimately unsuccessful.

Insolvent

A financial state in which an individual or entity cannot meet its debt obligations as they come due because its liabilities exceed its assets.

Stock Warrants

Securities that give the holder the right to purchase company stock at a specified price before a certain date.

Redeemed

Refers to the act of repaying or buying back something, such as a financial security or a reputation.

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