Exam 12: Alternative Minimum Tax

The recognized gain for regular income tax purposes and the recognized gain for AMT purposes on the sale of stock acquired with an incentive stock option ISO) are always the same, because the adjusted basis is the same.

In the current tax year David, a 32-year-old single taxpayer, reported itemized deductions of $24,500, comprised of the following amounts. $6,000 of medical expenses in excess of 7.5% of AGI) 4,500 of property taxes on his home 2,500 of investment expenses not limited by investment income) 3,000 of charitable contributions 8,500 of home mortgage interest Which of David's itemized deductions could create an AMT preference?

If the AMT base is greater than $191,100, the AMT rate for an individual taxpayer is the same as the AMT rate for married taxpayer, filing jointly.

A, B and C are each single, report wage income of $135,000, and take the standard deduction. The following additional information is provided about each taxpayer. A: Resides in New York. $45,000 interest income from Treasury bonds. B: Resides in Nevada. $45,000 capital gain from the sale of stock. C: Resides in Florida. $45,000 interest income from private-activity municipal bonds. All else being equal and taking into consideration the principles underlying the AMT, which of these taxpayers has the highest likelihood of being subject to the AMT in the current tax year?

lculating regular taxable income, what effect does this have in calculating AMTI?

Vinny's AGI is $250,000. He contributed $200,000 in cash to the Boy Scouts, a public charity. What is Vinny's charitable contribution deduction for AMT purposes?

Paul incurred circulation expenditures of $180,000 in 2018 and deducted that amount for regular income tax purposes. Paul has a $60,000 negative AMT adjustment for each of 2019, 2020, and for 2021.

The net capital gain included in an individual taxpayer's AMT base is eligible for the lower tax rate on net capital gain. This favorable alternative rate applies both in calculating the regular income tax and the AMT.

In 2018, Liam's filing status is married filing separately. For regular tax purposes, he has three dependents. Liam does not itemize deductions; his regular taxable income is $456,000. What is Liam's 2018 AMT base?

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

Kerri, who has AGI of $120,000, itemized her deductions in the current year. She incurred unreimbursed employee business expenses of $8,500. Kerri incurs a positive AMT adjustment of $2,400 in computing AMT.

The sale of business property could result in an AMT adjustment.

If a gambling loss itemized deduction is permitted for regular income tax purposes, no AMT adjustment results.

Kay claimed percentage depletion of $119,000 for the current year for regular income tax purposes. Cost depletion would have been $60,000. Her basis in the property was $90,000 at the beginning of the current year. Kay must treat the percentage depletion deducted in excess of cost depletion, or $59,000, as a preference in computing AMTI.

Joel placed real property in service in 2018 that cost $900,000 and used MACRS depreciation for regular income tax purposes. He is required to make a positive adjustment for AMT purposes in 2018 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

AGI is used as the base for application of percentage limitations i.e., 20%, 30%, 50%) that apply to the charitable contribution deduction for regular income tax purposes. Modified AGI is used as the base for application of percentage limitations that apply to the charitable contribution deduction for AMT purposes.

Assuming no phaseout, the AMT exemption amount for a married taxpayer filing separately for 2018 is the same as the AMT exemption amount for married taxpayer filing jointly filing status.

In 2018, the amount of the deduction for medical expenses for regular tax purposes may be different than for AMT purposes.

The required adjustment for AMT purposes for pollution control facilities placed in service this year is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

Akeem, who does not itemize, incurred a net operating loss NOL) of $50,000 in 2017. His deductions in 2017 included AMT tax preference items of $20,000, and he had no AMT adjustments. Assuming the NOL is not carried back, what is Akeem's ATNOLD carryover to 2018?