Exam 12: Alternative Minimum Tax

​In the current tax year, for regular tax purposes, Avery reports $65,000 of income and $190,000 of deductions from passive activities. For AMT purposes, the passive activity income amount is unchanged, but deductions from passive activities total $150,000. ​ What is Avery's suspended passive loss for regular tax and for AMT purposes? ​

Ashby, who is single and age 30, provides you with the following information from his financial records for 2017. ​ Calculate his AMT exemption for 2017.

Interest income on private activity bonds issued before 2009 and after 2010, reduced by expenses incurred in carrying the bonds, is a preference item that is included in computing AMTI.

Because passive losses are not deductible in computing either taxable income or AMTI, no AMT adjustment for passive losses is required.

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.

What itemized deductions are allowed for both regular income tax purposes and for AMT purposes?

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.

On February 1, 2017, Omar acquires used 7-year personal property for $100,000 for use in his business. Omar does not elect § 179 expensing, but he does take the maximum regular cost recovery deduction. As a result, Omar incurs a positive AMT adjustment in 2017 of what amount?

​Which of the following statements regarding differences in the corporate and the individual AMT calculation is most correct? ​

Which of the following statements is correct?

​Which of the following statements describing the alternative minimum tax (AMT) is most correct?

Wallace owns a construction company that builds both commercial and residential buildings. He contracts to build a residential building for $800,000, and for which he is eligible to use the completed contract method of accounting. In the current year for regular income tax purposes, Wallace does not recognize any gross income on the contract. Under the percentage of completion method, the income recognized under the contract would have been $60,000. Wallace's AMT effect is:

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

AMT adjustments can be positive or negative, whereas AMT preferences are always positive.

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:

Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2017. Robert itemizes deductions. ​ Calculate Robin's AMT for 2017.

If the AMT base is greater than $187,800, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

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.

How can interest on a private activity bond issued in 2013 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

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