Question 1

Unused foreign tax credits are carried back two years and then forward 20 years.

Accepted Answer

A) True 
 B)False  False

Question 2

In March 2018, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2018.Gray Corporation's work opportunity tax credit amounts for 2018 is:

Accepted Answer

A) $2,400. 
B) $4,800. 
C) $6,000. 
D) $12,000. 
A) $2,400. 
B) $4,800. 
C) $6,000. 
D) $12,000. B

Question 3

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.

Accepted Answer

A) True 
 B)False  False

Question 4

Marvin, the vice president of Lavender, Inc., exercises stock options for 100 shares of stock in March 2018.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 2014 and all restrictions on the free transferability had lapsed by the exercise date.

Accepted Answer

A) If Marvin sells the stock in December 2018 for $3,000, his AMT adjustment in 2018 is a positive adjustment of $800. 
B) If Marvin sells the stock in December 2019 for $3,000, his AMT adjustment in 2019 is $0. 
C) If Marvin sells the stock in December 2018 for $3,000, his AMT adjustment in 2018 is a negative adjustment of $800. 
D) If Marvin sells the stock in December 2019 for $3,000, his AMT adjustment in 2019 is a negative adjustment of $1,000. 
E) None of the above. 
A) If Marvin sells the stock in December 2018 for $3,000, his AMT adjustment in 2018 is a positive adjustment of $800. 
B) If Marvin sells the stock in December 2019 for $3,000, his AMT adjustment in 2019 is $0. 
C) If Marvin sells the stock in December 2018 for $3,000, his AMT adjustment in 2018 is a negative adjustment of $800. 
D) If Marvin sells the stock in December 2019 for $3,000, his AMT adjustment in 2019 is a negative adjustment of $1,000. 
E) None of the above.

Question 5

In working with the foreign tax credit, a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Accepted Answer

A) Deducting the excess foreign taxes that do not qualify for the credit. 
B) Repatriating more foreign income to the United States in the year there is an excess limitation. 
C) Generating "same basket" foreign-source income that is subject to a tax rate higher than the U.S.tax rate. 
D) Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S.tax rate. 
A) Deducting the excess foreign taxes that do not qualify for the credit. 
B) Repatriating more foreign income to the United States in the year there is an excess limitation. 
C) Generating "same basket" foreign-source income that is subject to a tax rate higher than the U.S.tax rate. 
D) Generating "same basket" foreign-source income that is subject to a tax rate lower than the U.S.tax rate.

Question 6

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.

Accepted Answer

A) True 
 B)False

Question 7

Do AMT adjustments and AMT preferences increase or decrease AMTI?

Accepted Answer

AMT adjustments can be both po

Question 8

Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits.   Calculate Justin's tax liability after credits.

Accepted Answer

A) $190,000 
B) $194,000 
C) $195,000 
D) $200,000 
A) $190,000 
B) $194,000 
C) $195,000 
D) $200,000

Question 9

Which of the following best describes the treatment applicable to unused business credits?

Accepted Answer

A) Unused amounts are carried forward indefinitely. 
B) Unused amounts are first carried back one year and then forward for 20 years. 
C) Unused amounts are first carried back one year and then forward for 10 years. 
D) Unused amounts are first carried back three years and then carried forward for 15 years. 
A) Unused amounts are carried forward indefinitely. 
B) Unused amounts are first carried back one year and then forward for 20 years. 
C) Unused amounts are first carried back one year and then forward for 10 years. 
D) Unused amounts are first carried back three years and then carried forward for 15 years.

Question 10

The components of the general business credit include all of the following except:

Accepted Answer

A) Credit for employer-provided child care. 
B) Disabled access credit. 
C) Research activities credit. 
D) Tax credit for rehabilitation expenditures. 
E) All of the above are components of the general business credit. 
A) Credit for employer-provided child care. 
B) Disabled access credit. 
C) Research activities credit. 
D) Tax credit for rehabilitation expenditures. 
E) All of the above are components of the general business credit.

Question 11

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Accepted Answer

A) $8,750. 
B) $4,500. 
C) $4,375. 
D) $4,250. 
A) $8,750. 
B) $4,500. 
C) $4,375. 
D) $4,250.

Question 12

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.

Accepted Answer

A) True 
 B)False

Question 13

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?

Accepted Answer

A) All of the itemized deductions potentially create an AMT preference. 
B) The deduction for medical expenses and property taxes potentially create an AMT preference. 
C) The deduction for investment expenses and property taxes potentially create an AMT preference. 
D) None of the itemized deductions potentially create an AMT preference. 
A) All of the itemized deductions potentially create an AMT preference. 
B) The deduction for medical expenses and property taxes potentially create an AMT preference. 
C) The deduction for investment expenses and property taxes potentially create an AMT preference. 
D) None of the itemized deductions potentially create an AMT preference.

Question 14

Jackson sells qualifying small business stock for $125,000 adjusted basis of $105,000) in 2018 the stock was acquired in 2012).In calculating gross income for regular income tax purposes, he excludes all of his realized gain of
$20,000.The $20,000 exclusion is a preference in calculating Jackson's AMTI.

Accepted Answer

A) True 
 B)False

Question 15

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?

Accepted Answer

A) Taxpayer A. 
B) Taxpayer B. 
C) Taxpayer C. 
D) All three taxpayers are equally likely to be in AMT. 
A) Taxpayer A. 
B) Taxpayer B. 
C) Taxpayer C. 
D) All three taxpayers are equally likely to be in AMT.

Question 16

Eula owns a mineral property that had a basis of $23,000 at the beginning of the year.Cost depletion is $19,000.The property qualifies for a 15% depletion rate.Gross income from the property was $200,000, and net income before the percentage depletion deduction was $50,000.What is Eula's AMT preference for excess depletion, if she maximized her regular-tax depletion deduction?

Accepted Answer

A) $15,000 
B) $23,000 
C) $25,000 
D) $2,000 
A) $15,000 
B) $23,000 
C) $25,000 
D) $2,000

Question 17

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.

Accepted Answer

A) True 
 B)False

Question 18

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?

Accepted Answer

A) $50,000 
B) $30,000 
C) $20,000 
D) $40,000 
E) None of the above 
A) $50,000 
B) $30,000 
C) $20,000 
D) $40,000 
E) None of the above

Question 19

If the taxpayer elects to capitalize and to amortize intangible drilling costs over a 3-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 20

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?

Accepted Answer

A) $0 
B) $50,000 
C) $125,000 
D) $150,000 
A) $0 
B) $50,000 
C) $125,000 
D) $150,000

Unused foreign tax credits are carried back two years and then forward 20 years.

In March 2018, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2018.Gray Corporation's work opportunity tax credit amounts for 2018 is:

In working with the foreign tax credit, a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.

Do AMT adjustments and AMT preferences increase or decrease AMTI?

Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits. Calculate Justin's tax liability after credits.

Which of the following best describes the treatment applicable to unused business credits?

The components of the general business credit include all of the following except:

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

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.

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?

If the taxpayer elects to capitalize and to amortize intangible drilling costs over a 3-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

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?

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Individuals As the Taxpayer

Individuals: Income, Deductions, and Credits

Individuals As Employees and Proprietors

Corporations: Organization, Capital Structure, and Operating Rules

Corporations: Earnings and Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Comparative Forms of Doing Business

Filters

Exam 17: Business Tax Credits and the Alternative Minimum Tax

Unused foreign tax credits are carried back two years and then forward 20 years.

In March 2018, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2018.Gray Corporation's work opportunity tax credit amounts for 2018 is:

In working with the foreign tax credit, a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.

Do AMT adjustments and AMT preferences increase or decrease AMTI?

Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits. Calculate Justin's tax liability after credits.

Which of the following best describes the treatment applicable to unused business credits?

The components of the general business credit include all of the following except:

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

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.

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?

If the taxpayer elects to capitalize and to amortize intangible drilling costs over a 3-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

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?

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Individuals As the Taxpayer

Individuals: Income, Deductions, and Credits

Individuals As Employees and Proprietors

Corporations: Organization, Capital Structure, and Operating Rules

Corporations: Earnings and Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Comparative Forms of Doing Business

Filters