Question 1

The corporate AMT does not apply to "small" C corporations.

Accepted Answer

A) True 
 B)False

Question 2

Several years ago, Tom purchased a structure for $300,000 that was placed in service in 1929.Three and one-half years ago he incurred qualifying rehabilitation expenditures of $600,000.In the current year, Tom sold the property in a taxable transaction.Calculate the amount of the recapture of the tax credit for rehabilitation expenditures.

Accepted Answer

A) $0 
B) $24,000 
C) $36,000 
D) $48,000 
E) None of the above 
A) $0 
B) $24,000 
C) $36,000 
D) $48,000 
E) None of the above

Question 3

In 2017, Job Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $7 million.If Job Corporation's ACE is $16 million, its tentative minimum tax for 2017 is:

Accepted Answer

A) $2.55 million. 
B) $2.75 million. 
C) $3.45 million. 
D) $4.2 million. 
E) None of the above. 
A) $2.55 million. 
B) $2.75 million. 
C) $3.45 million. 
D) $4.2 million. 
E) None of the above.

Question 4

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

Accepted Answer

A) True 
 B)False

Question 5

The tax benefit received from a tax credit is never affected by the tax rate of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 6

Dale owns and operates Dale's Emporium as a sole proprietorship.On January 30, 2003, Dale's Emporium acquired a warehouse for $100,000.For regular income tax purposes in 2017, depreciation was deducted under MACRS using a 2.564% rate.Determine the AMT adjustment for depreciation and indicate whether it is positive or negative.

Accepted Answer

A) $64 negative adjustment. 
B) $64 positive adjustment. 
C) No adjustment is required because Dale's Emporium used the Alternative Depreciation System (ADS) to compute depreciation on the property for AMT purposes. 
D) No adjustment is required because Dale's Emporium used MACRS to compute the depreciation of the property for regular income tax purposes. 
A) $64 negative adjustment. 
B) $64 positive adjustment. 
C) No adjustment is required because Dale's Emporium used the Alternative Depreciation System (ADS) to compute depreciation on the property for AMT purposes. 
D) No adjustment is required because Dale's Emporium used MACRS to compute the depreciation of the property for regular income tax purposes.

Question 7

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Accepted Answer

A) True 
 B)False

Question 8

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

Accepted Answer

The disabled access credit is designed t

Question 9

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him.Ahmad, who normally itemizes his deductions, is in the 28% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Accepted Answer

A) $0, take neither the itemized deduction nor the tax credit. 
B) $2,500, take the tax credit. 
C) $2,800, take the itemized deduction. 
D) Both options produce the same benefit. 
E) None of the above. 
A) $0, take neither the itemized deduction nor the tax credit. 
B) $2,500, take the tax credit. 
C) $2,800, take the itemized deduction. 
D) Both options produce the same benefit. 
E) None of the above.

Question 10

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

Accepted Answer

A) True 
 B)False

Question 11

During the year, Green, Inc., incurs the following research expenditures: $\begin{array} { l  }
 \text {In-house wages, supplies, computer time }&\$600,000 \ \text {Paid to Blue Foundation for research  }& 30,000\
\end{array}$
 ? Green's qualifying research expenditures for the year are:

Accepted Answer

A) $60,000. 
B) $75,000. 
C) $79,500. 
D) $90,000. 
E) None of the above. 
A) $60,000. 
B) $75,000. 
C) $79,500. 
D) $90,000. 
E) None of the above.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 14

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Accepted Answer

A) True 
 B)False

Question 15

Negative AMT adjustments for the current year caused by timing differences are offset by the positive AMT adjustments in prior tax years also caused by timing differences.

Accepted Answer

A) True 
 B)False

Question 16

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts.

Accepted Answer

A) True 
 B)False

Question 17

Molly has generated general business credits over the years that have not been utilized.The amounts generated and not utilized follow: $$\begin{array} { r r } 
2013 & \$ 2,500 \
2014 & 7,500 \
2015 & 5,000 \
2016 & 4,000
\end{array}$$ ? In the current year, 2017, her business generates an additional $15,000 general business credit.In 2017, based on her tax liability before credits, she can utilize a general business credit of up to $20,000.After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2017 is available for future years?

Accepted Answer

A) $0. 
B) $1,000. 
C) $14,000. 
D) $15,000. 
E) None of the above. 
A) $0. 
B) $1,000. 
C) $14,000. 
D) $15,000. 
E) None of the above.

Question 18

Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him.Roger, who does not anticipate itemizing his deductions, is in the 30% marginal income tax bracket.If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure, by how much will Roger's tax liability decline because of the investment?

Accepted Answer

A) $0 
B) $1,800 
C) $2,200 
D) $2,400 
E) None of the above 
A) $0 
B) $1,800 
C) $2,200 
D) $2,400 
E) None of the above

Question 19

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 for regular tax purposes.

Accepted Answer

A) True 
 B)False

Question 20

Which, if any, of the following correctly describes the research activities credit?

Accepted Answer

A) The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B) If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C) The credit is not available for research conducted outside the United States. 
D) All corporations qualify for the basic research credit. 
E) None of the above. 
A) The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B) If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C) The credit is not available for research conducted outside the United States. 
D) All corporations qualify for the basic research credit. 
E) None of the above.

The corporate AMT does not apply to "small" C corporations.

In 2017, Job Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $7 million.If Job Corporation's ACE is $16 million, its tentative minimum tax for 2017 is:

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

The tax benefit received from a tax credit is never affected by the tax rate of the taxpayer.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

During the year, Green, Inc., incurs the following research expenditures: In-house wages, supplies, computer time \6 00,000 Paid to Blue Foundation for research 30,000 ? Green's qualifying research expenditures for the year are:

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

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Negative AMT adjustments for the current year caused by timing differences are offset by the positive AMT adjustments in prior tax years also caused by timing differences.

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts.

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 for regular tax purposes.

Which, if any, of the following correctly describes the research activities credit?

Introduction to Taxation

Working With the Tax Law

Taxation on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Basis, Gain and Loss, and Nontaxable Exchanges

Capital Gains and Losses

Individuals As the Taxpayers

Income, Deductions and Credits

Individuals As Employees and Proprietors

Organization, Capital Structure, and Operating Rules

Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multi-Juris-Dictional Taxation

Comparative Forms of Doing Business

Filters

Exam 17: Tax Credits and Corporate Alternative Minimum Tax

The corporate AMT does not apply to "small" C corporations.

In 2017, Job Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $7 million.If Job Corporation's ACE is $16 million, its tentative minimum tax for 2017 is:

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

The tax benefit received from a tax credit is never affected by the tax rate of the taxpayer.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

During the year, Green, Inc., incurs the following research expenditures: In-house wages, supplies, computer time \6 00,000 Paid to Blue Foundation for research 30,000 ? Green's qualifying research expenditures for the year are:

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

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Negative AMT adjustments for the current year caused by timing differences are offset by the positive AMT adjustments in prior tax years also caused by timing differences.

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts.

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 for regular tax purposes.

Which, if any, of the following correctly describes the research activities credit?

Introduction to Taxation

Working With the Tax Law

Taxation on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Basis, Gain and Loss, and Nontaxable Exchanges

Capital Gains and Losses

Individuals As the Taxpayers

Income, Deductions and Credits

Individuals As Employees and Proprietors

Organization, Capital Structure, and Operating Rules

Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multi-Juris-Dictional Taxation

Comparative Forms of Doing Business

Filters