A more thorough explanation:

Alternative minimum tax (AMT) is a tax system that calculates taxable income after certain deductions and tax preferences are made. It is an additional tax imposed on certain individuals, estates, and trusts in addition to the regular income tax. The purpose of the AMT is to ensure that high-income individuals and entities pay a certain amount of income tax despite favorable tax treatment.

The AMT is designed to guarantee that certain taxpayers pay their fair share or at least the minimum owed. It only applies when income reaches a certain level, such as $113,400 for couples filing jointly in 2020.

Let's say a married couple has a taxable income of $200,000. They have several deductions and tax preferences that reduce their regular income tax liability to $30,000. However, the AMT calculation shows that they owe an additional $5,000 in AMT. This means that their total tax liability for the year is $35,000.

Another example is a trust that has a taxable income of $500,000. The trust has several deductions and tax preferences that reduce its regular income tax liability to $100,000. However, the AMT calculation shows that it owes an additional $20,000 in AMT. This means that the trust's total tax liability for the year is $120,000.

These examples illustrate how the AMT ensures that high-income individuals and entities pay a certain amount of income tax despite favorable tax treatment. Without the AMT, these taxpayers would be able to take advantage of various deductions and tax preferences to significantly reduce their tax liability.