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In determining the amount of the alternative minimum taxable income of any taxpayer (other than a corporation), the following treatment shall apply (in lieu of the treatment applicable for purposes of computing the regular tax):
(1) Limitation on deductions
(A) In general No deduction shall be allowed— (i) for any miscellaneous itemized deduction (as defined in section 67(b)), or (ii) for any taxes described in paragraph (1), (2), or (3) of section 164(a) or clause (ii) of section 164(b)(5)(A). Clause (ii) shall not apply to any amount allowable in computing adjusted gross income.
(B) Interest In determining the amount allowable as a deduction for interest, subsections (d) and (h) of section 163 shall apply, except that— (i) in lieu of the exception under section 163(h)(2)(D), the term “personal interest” shall not include any qualified housing interest (as defined in subsection (e)), (ii) interest on any specified private activity bond (and any amount treated as interest on a specified private activity bond under section 57(a)(5)(B)), and any deduction referred to in section 57(a)(5)(A), shall be treated as includible in gross income (or as deductible) for purposes of applying section 163(d), (iii) in lieu of the exception under section 163(d)(3)(B)(i), the term “investment interest” shall not include any qualified housing interest (as defined in subsection (e)), and (iv) the adjustments of this section and sections 57 and 58 shall apply in determining net investment income under section 163(d).
(C) Treatment of certain recoveries No recovery of any tax to which subparagraph (A)(ii) applied shall be included in gross income for purposes of determining alternative minimum taxable income.
(D) Standard deduction and deduction for personal exemptions not allowed The standard deduction under section 63(c), the deduction for personal exemptions under section 151, and the deduction under section 642(b) shall not be allowed.
(E) Section 68 not applicable Section 68 shall not apply.
(A) In general The amount allowable as a deduction under section 173, 174(a), or 174A(a) in computing the regular tax for amounts paid or incurred after December 31, 1986 , shall be capitalized and— (i) in the case of circulation expenditures described in section 173, shall be amortized ratably over the 3-year period beginning with the taxable year in which the expenditures were made, or (ii) in the case of foreign research or experimental expenditures described in section 174(a) and domestic research or experimental expenditures in section 174A(a), shall be amortized ratably over the 10-year period beginning with the taxable year in which the expenditures were made.
(B) Loss allowed If a loss is sustained with respect to any property described in subparagraph (A), a deduction shall be allowed for the expenditures described in subparagraph (A) for the taxable year in which such loss is sustained in an amount equal to the lesser of— (i) the amount allowable under section 165(a) for the expenditures if they had remained capitalized, or (ii) the amount of such expenditures which have not previously been amortized under subparagraph (A).
(C) Exception for certain research and experimental expenditures If the taxpayer materially participates (within the meaning of section 469(h)) in an activity, this paragraph shall not apply to any amount allowable as a deduction under section 174(a) or 174A(a) for expenditures paid or incurred in connection with such activity.
Section 421 shall not apply to the transfer of stock acquired pursuant to the exercise of an incentive stock option (as defined in section 422). Section 422(c)(2) shall apply in any case where the disposition and the inclusion for purposes of this part are within the same taxable year and such section shall not apply in any other case. The adjusted basis of any stock so acquired shall be determined on the basis of the treatment prescribed by this paragraph.