What specific loopholes did the AMT aim to close

1. Deductions and credits used by high-income individuals to significantly reduce or eliminate their regular income tax liability:
- The AMT was originally designed to prevent wealthy taxpayers from using deductions and credits to avoid paying any income tax. [1][4]
- It requires taxpayers to calculate their liability under both the regular income tax and the AMT, and pay the higher of the two. This helps ensure high-income individuals pay at least some amount of income tax. [4]

2. Tax avoidance through the use of certain tax-exempt investments:
- The AMT makes interest from private activity bonds taxable, which helps close a loophole that allowed some high-income individuals to avoid taxes by investing in these types of tax-exempt bonds. [4]

3. Exploiting incentive stock options:
- The AMT requires taxpayers to include the difference between the exercise price and fair market value of incentive stock options as an adjustment, even if the stock is not sold. This prevents high-income individuals from avoiding taxes through this mechanism. [4]

4. Claiming excessive deductions and exclusions:
- The AMT limits or disallows certain deductions and exclusions, such as the deduction for state and local taxes, that high-income taxpayers were using to significantly reduce their regular tax liability. [4]

In summary, the key loopholes the AMT aimed to close were those allowing high-income individuals to use deductions, credits, tax-exempt investments, and other provisions to avoid paying their fair share of income taxes. The AMT was designed to ensure these taxpayers paid at least a minimum amount of tax.