Exam 15: Alternative Minimum Tax

Sage, Inc., has the following gross receipts and taxable income: Gross receipts Taxable income 2002 \ 5,600,000 \ 120,000 2003 4,300,000 190,000 2004 7,200,000 162,000 2005 9.000.000 180,000 2006 6,200,000 150,000 2007 6,500,000 160,000 2008 6,800,000 162,000 2009 7,000,000 154,000 2010 7,200,000 190,000 2011 7,100,000 200,000 2012 7,300,000 185,000 2013 7,200,000 201,000 2014 7,000,000 225,000 Is Sage, Inc., subject to the AMT in 2014?

If a gambling loss itemized deduction is permitted for regular income tax purposes, there will be no AMT adjustment associated with the gambling loss.

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, the positive and negative adjustments that have been made for AMT purposes will net to zero.

C corporations are subject to a positive AMT adjustment equal to 75% of the excess of ACE over AMTI before the ACE adjustment.

The AMT adjustment for research and experimental expenditures can be avoided if the taxpayer capitalizes the expenditures and amortizes them over a 10-year period.

The deduction for personal and dependency exemptions is allowed for regular income tax purposes, but is disallowed for AMT purposes. This results in a positive AMT adjustment.

How can an AMT adjustment be avoided for a taxpayer who incurs circulation expenditures in the current tax year?