Exam 17: Tax Credits and Corporate Alternative Minimum Tax

In 2017, Glenn recorded 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?

Some (or all) of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Benita expensed mining exploration and development costs of $500,000 incurred in the current tax year.She will be required to make negative AMT adjustments for each of the next ten years and a positive AMT adjustment in the current tax year.

During the year, Green Corporation (a U.S.corporation) has U.S.-source income of $750,000 and foreign income of $500,000.The foreign-source income generates foreign income taxes of $240,000.The U.S.income tax before the foreign tax credit is $425,000.Green Corporation's foreign tax credit is:

Since most tax preferences are merely timing differences, they eventually will reverse and net to zero.

A taxpayer who expenses circulation expenditures in the year incurred for regular income tax purposes will have a positive AMT adjustment in the following year.

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

The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to deduct the expenditures in the year incurred for regular income tax purposes, rather than writing off the expenditures over a 10-year period for regular income tax purposes.

All of a C corporation's AMT is available for carryover as a minimum tax credit, regardless of whether the adjustments and preferences originate from timing differences or AMT preferences.

What is the relationship between taxable income and AMTI?

What is the relationship between the regular income tax liability and the TMT?

Which of the following correctly describes the tax credit for rehabilitation expenditures?

Under what circumstances are C corporations exempt from the AMT?

Elmer exercises an incentive stock option (ISO) in March for $6,000 (fair market value of the stock on the exercise date is $7,600).If Elmer sells the stock in November of the same tax year for $8,000, he reports a $1,600 AMT adjustment for the year.

​Jesse placed equipment that cost $48,000 in service in 2015 (neither § 179 expensing nor bonus depreciation was elected).On July 1, 2017, Jesse sold the equipment for $22,000. ​ Regular tax and AMT depreciation amounts for the equipment are computed as follows. ​ Regular Tax AMT Depreciation Depreciation 2015 \ 9,600 \ 7,200 2016 \ 15,360 \ 12,240 2017 \ 4,608 \ 4,284 ​ ​ What AMT adjustments will be required for the equipment for 2017? ​ A)​$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale B)​$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale D)​$324 positive adjustment depreciation; $0 adjustment for the equipment sale

The AMT exemption for a C corporation is $50,000, reduced by 50% of the amount by which AMTI exceeds $150,000.

Sand Corporation, a calendar year C corporation, reports alternative minimum taxable income of $900,000 for 2017.Sand's tentative minimum tax for 2017 is:

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?

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

If a taxpayer is required to recapture any tax credit for rehabilitation expenditures, the recapture amount need not be added to the adjusted basis of the rehabilitation expenditures.