What was Congress trying to do? Some people were getting large tax benefits through stock options, large capital gains, large itemized deductions for state and local taxes, large miscellaneous itemized expenses, accelerated depreciation and municipal bond interest. With all of these deductions and tax benefits, they were paying no taxes. The AMT takes many of these deductions completely away so that the taxpayer will show an Alternate Minimum Tax due. AMT is a tax figure separate from your regular income tax. The law says "pay the one that is the largest -- either the regular income tax or the AMT". That way, the taxpayer with all the large deductions will pay some tax. If you are going to have large deductions from incentive stock options, large capital gains, large state and local tax deductions, or large miscellaneous itemized expenses, or large tax-free income from private activity municipal bonds, then you should start working with your tax preparer. Your planning in the next few months and your planning for 2005 might be able to minimize the cash you must send "Uncle Sam".