AMT Reform Finally Here?

I did not get hit with the AMT this year, though I was pretty concerned that I would. It's tough to know if you're going to get hit without doing your taxes, and what with other stuff going on, the taxes weren't finished until late. I had a couple of friends that got nailed with it this year. One owed around $10k more than they thought they'd owe, and the other got hit with a surprise, totally unexpected $30k shortfall. Wiped out his savings and had to put off plans to buy a house. Ouch. I breathed a sight of relief when my accountant finally told me I was due a refund.

I am reasonably certain I'm going to get hit in 2007 if there's no change. I got married this year, and apparently that's not doing me any favors tax-wise. One of the effects of my AMT limbo is that I've been completely paralyzed on certain financial decisions. My financial portfolio is very heavily weighted to a couple of investments, and I'd like to diversify by rebalancing. Unfortunately, with this AMT thing hanging over my head I was concerned that the capital gains from my rebalance would reduce my AMT exemption, thus effectivly getting taxed at 22% rather than the standard 15% long term rate.

The Dems have apparently taken up the AMT mantle this year (risky, since many people, like my friend, don't know they're about to get hit with it and will thus never know that the Dems saved them from it). AMT reform presents all kinds of problems (namely, how are they going to make up the shortfall), but it looks like the Dems have finally agreed on a strategy to protect folks who make less than $250k per year. I'm waiting with bated breath.