Exam 15: Alternative Minimum Tax

If the AMT base is greater than $182,500, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

In 2014, Glenn had a $108,000 loss on a passive activity. None of the loss is attributable to AMT adjustments or preferences. She has no other passive activities. Which of the following statements is correct?

If Jessica exercises an ISO and disposes of the option in the same tax year, are any AMT adjustments required?

Madge's tentative AMT is $112,000. Her regular income tax liability is $99,000. Madge's AMT is $13,000.

Marvin, the vice president of Lavender, Inc., exercises stock options for 100 shares of stock in March 2014. The stock options are incentive stock options (ISOs). Their exercise price is $20 and the fair market value on the date of exercise is $28. The options were granted in March 2010 and all restrictions on the free transferability had lapsed by the exercise date.

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include the following:

Which of the following itemized deductions definitely will be the same amount for the regular income tax and the AMT and thus result in no AMT adjustment in 2014?

Unless circulation expenditures are amortized over a three-year period for regular income tax purposes, there will be an AMT adjustment.

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a higher income level than it does for a single taxpayer.

In deciding to enact the alternative minimum tax, Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

In 2005, Collies exercised an incentive stock option (ISO), acquiring 150 shares of stock at an option price of $75 per share (fair market value at the date of exercise was $130 per share). In 2014, the rights in the stock become freely transferable (fair market value is still $130 per share). Which of the following statements is incorrect?

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

In determining the amount of the AMT adjustments, discuss the difference in the treatment of a building placed in service after 1986 and before January 1, 1999 and a building placed in service after December 31, 1998.

If the regular income tax deduction for medical expenses is $0, under certain circumstances the AMT deduction for medical expenses can be greater than $0.

Which of the following normally produces positive AMT adjustments?

Omar acquires used 7-year personal property for $100,000 to use in his business in February 2014. Omar does not elect § 179 expensing, but does take the maximum regular cost recovery deduction. He elects not to take additional first-year depreciation. As a result, Omar will have a positive AMT adjustment in 2014 of what amount?

Joel placed real property in service in 2014 that cost $900,000 and used MACRS for regular income tax purposes. He is required to make a positive adjustment for AMT purposes in 2014 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

For regular income tax purposes, Yolanda, who is single, is in the 35% tax bracket. Her AMT base is $220,000. Her tentative AMT is:

How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

Durell owns a construction company that builds residential housing. The company is eligible to use the completed contract method for regular income tax purposes. What can Durell do to minimize his AMT?