Question 1

Itemized deductions are allowed in their entirety for AMT purposes.

Accepted Answer

A) True 
 B)False  False

Question 2

Heather purchased furniture and fixtures (7-year property)for her retail shop for $50,000.What is the AMT depreciation adjustment required in 2017 if the property was purchased in May 2017,assuming no bonus depreciation was taken?

Accepted Answer

A) $0. 
B) $1,790. 
C) $5,355. 
D) $7,145. 
A) $0. 
B) $1,790. 
C) $5,355. 
D) $7,145. B

Question 3

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

Accepted Answer

A) True 
 B)False  True

Question 4

Every taxpayer who calculates depreciation on his or her tax return will have a depreciation adjustment for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 5

Jacob is single with no dependents.During 2017,Jacob has $110,000 of taxable income.He has $38,000 of positive AMT adjustments and $22,000 of tax preferences.Jacob does not itemize his deductions but takes the standard deduction.Calculate Jacob's AMTI.

Accepted Answer

A) $120,350. 
B) $174,100. 
C) $176,350. 
D) $180,400. 
A) $120,350. 
B) $174,100. 
C) $176,350. 
D) $180,400.

Question 6

Oliver has an $80,000 loss from an investment in a partnership in which he does not materially participate.He paid $60,000 for his interest.Oliver also has $10,000 of passive income from another limited partnership.How much of the loss,if any,is disallowed by the at-risk rules? How much is disallowed by the passive loss rules?

Accepted Answer

The at-risk rules disallow $20,000 of th

Question 7

If a taxpayer disposes of a passive activity in a taxable transaction,suspended passive losses from past years can be used to offset salary and portfolio income.

Accepted Answer

A) True 
 B)False

Question 8

How much,in rental losses,can an individual earning a salary of $125,000 per year offset against salary if he or she owns at least 10% of a rental activity and actively participates in the rental activity?

Accepted Answer

A) $0. 
B) $2,500. 
C) $12,500. 
D) $25,000. 
A) $0. 
B) $2,500. 
C) $12,500. 
D) $25,000.

Question 9

An equipment leasing activity is not subject to the at-risk rules.

Accepted Answer

A) True 
 B)False

Question 10

The term "passive activity" includes any activity for the production of income in which the taxpayer does not materially participate.

Accepted Answer

A) True 
 B)False

Question 11

Gifts to charity are not allowed for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 12

For AMT purposes,the standard deduction and personal exemptions are:

Accepted Answer

A) Allowed for AMT purposes. 
B) Added as a positive AMT adjustment. 
C) Subtracted as a negative AMT adjustment. 
D) Reduced by half for AMT purposes. 
A) Allowed for AMT purposes. 
B) Added as a positive AMT adjustment. 
C) Subtracted as a negative AMT adjustment. 
D) Reduced by half for AMT purposes.

Question 13

Jon is in the car rental business.Most of his customers rent cars on a daily basis.Jon's car rental business is considered a passive activity since rental activities are always treated as passive activities.

Accepted Answer

A) True 
 B)False

Question 14

Jonathan is married,files a joint return,and has one child.During 2017,Jonathan has $85,000 of taxable income.He has $20,000 of positive AMT adjustments and $28,000 of tax preferences.Since Jonathan rents his home (pays no mortgage interest)and lives in Florida (has no state income tax),he does not itemize his deductions but takes the standard deduction.Calculate Jonathan's AMTI (before exclusion amount).

Accepted Answer

A) $137,700. 
B) $145,250. 
C) $145,700. 
D) $157,850. 
A) $137,700. 
B) $145,250. 
C) $145,700. 
D) $157,850.

Question 15

The initial amount considered at-risk is the cash plus the adjusted basis of property contributed to the activity plus certain borrowed amounts.

Accepted Answer

A) True 
 B)False

Question 16

Tax preference items for AMT:

Accepted Answer

A) Can be positive or negative. 
B) Can only result in a positive addition to AMTI. 
C) Do not affect the AMT calculation. 
D) None of these. 
A) Can be positive or negative. 
B) Can only result in a positive addition to AMTI. 
C) Do not affect the AMT calculation. 
D) None of these.

Question 17

Denise's AGI is $145,000 before considering her single rental property.During the year,Denise had a rental loss of $13,000.What is Denise's AGI after considering the rental loss?

Accepted Answer

A) $122,500. 
B) $132,000. 
C) $142,500. 
D) $145,000. 
A) $122,500. 
B) $132,000. 
C) $142,500. 
D) $145,000.

Question 18

In 2017,Nigel contributes cash of $10,000 in exchange for a 20% interest in the NDP Partnership.The partnership is not a passive activity.For 2017,the partnership had an ordinary loss of $80,000,interest income of $2,000,dividends of $5,000,and capital gains of $4,000.How much of the current year loss is deductible by Nigel and what is Nigel's at-risk amount on December 31,2017?

Accepted Answer

Nigel's deductible loss and December 31,

Question 19

To be considered a material participant in an activity,a taxpayer must meet all of the seven tests prescribed in the regulations.

Accepted Answer

A) True 
 B)False

Question 20

If a loss is disallowed under passive loss rules,the loss is:

Accepted Answer

A) Lost forever. 
B) Carried over indefinitely and deductible when passive income is generated. 
C) Carried over indefinitely and deductible when the activity is disposed of. 
D) Both carried over indefinitely and deductible when passive income is generated and carried over indefinitely and deductible when the activity is disposed of. 
A) Lost forever. 
B) Carried over indefinitely and deductible when passive income is generated. 
C) Carried over indefinitely and deductible when the activity is disposed of. 
D) Both carried over indefinitely and deductible when passive income is generated and carried over indefinitely and deductible when the activity is disposed of.

Itemized deductions are allowed in their entirety for AMT purposes.

Heather purchased furniture and fixtures (7-year property)for her retail shop for $50,000.What is the AMT depreciation adjustment required in 2017 if the property was purchased in May 2017,assuming no bonus depreciation was taken?

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

Every taxpayer who calculates depreciation on his or her tax return will have a depreciation adjustment for AMT purposes.

Jacob is single with no dependents.During 2017,Jacob has $110,000 of taxable income.He has $38,000 of positive AMT adjustments and $22,000 of tax preferences.Jacob does not itemize his deductions but takes the standard deduction.Calculate Jacob's AMTI.

If a taxpayer disposes of a passive activity in a taxable transaction,suspended passive losses from past years can be used to offset salary and portfolio income.

How much,in rental losses,can an individual earning a salary of $125,000 per year offset against salary if he or she owns at least 10% of a rental activity and actively participates in the rental activity?

An equipment leasing activity is not subject to the at-risk rules.

The term "passive activity" includes any activity for the production of income in which the taxpayer does not materially participate.

Gifts to charity are not allowed for AMT purposes.

For AMT purposes,the standard deduction and personal exemptions are:

Jon is in the car rental business.Most of his customers rent cars on a daily basis.Jon's car rental business is considered a passive activity since rental activities are always treated as passive activities.

The initial amount considered at-risk is the cash plus the adjusted basis of property contributed to the activity plus certain borrowed amounts.

Tax preference items for AMT:

Denise's AGI is $145,000 before considering her single rental property.During the year,Denise had a rental loss of $13,000.What is Denise's AGI after considering the rental loss?

To be considered a material participant in an activity,a taxpayer must meet all of the seven tests prescribed in the regulations.

If a loss is disallowed under passive loss rules,the loss is:

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

Partnership Taxation

Corporate Taxation

Filters

Exam 13: At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Itemized deductions are allowed in their entirety for AMT purposes.

Heather purchased furniture and fixtures (7-year property)for her retail shop for $50,000.What is the AMT depreciation adjustment required in 2017 if the property was purchased in May 2017,assuming no bonus depreciation was taken?

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

Every taxpayer who calculates depreciation on his or her tax return will have a depreciation adjustment for AMT purposes.

Jacob is single with no dependents.During 2017,Jacob has $110,000 of taxable income.He has $38,000 of positive AMT adjustments and $22,000 of tax preferences.Jacob does not itemize his deductions but takes the standard deduction.Calculate Jacob's AMTI.

If a taxpayer disposes of a passive activity in a taxable transaction,suspended passive losses from past years can be used to offset salary and portfolio income.

How much,in rental losses,can an individual earning a salary of $125,000 per year offset against salary if he or she owns at least 10% of a rental activity and actively participates in the rental activity?

An equipment leasing activity is not subject to the at-risk rules.

The term "passive activity" includes any activity for the production of income in which the taxpayer does not materially participate.

Gifts to charity are not allowed for AMT purposes.

For AMT purposes,the standard deduction and personal exemptions are:

Jon is in the car rental business.Most of his customers rent cars on a daily basis.Jon's car rental business is considered a passive activity since rental activities are always treated as passive activities.

The initial amount considered at-risk is the cash plus the adjusted basis of property contributed to the activity plus certain borrowed amounts.

Tax preference items for AMT:

Denise's AGI is $145,000 before considering her single rental property.During the year,Denise had a rental loss of $13,000.What is Denise's AGI after considering the rental loss?

To be considered a material participant in an activity,a taxpayer must meet all of the seven tests prescribed in the regulations.

If a loss is disallowed under passive loss rules,the loss is:

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

Partnership Taxation

Corporate Taxation

Filters