Yes there is still AMT but with a higher exemption so not many people have to pay it.

What does AMT have to do with "has a legitimate construction business LLC and has a $35,380 loss but is only allowed to claim $12,700" ?

Yes, AMT still exists.

But it has nothing to do with limiting "legitimate" business losses.

Review your entries for active vs. passive involvement.

SMLLC on Sch C?  or losses feeding from a K-1?

Gotta be able to "follow the money" in the tax return to see where/what is happening.