Exam 12: Alternative Minimum Tax

Lavender, Inc., incurs research and experimental expenditures of $210,000 in 2017. Determine the amount of the AMT adjustment for 2017 and for 2018 if for regular income tax purposes, assuming in independent cases that: ​

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

Assuming no phaseout, the AMT exemption amount for a married taxpayer filing separately for 2017 is more than the AMT exemption amount for C corporations.

Darin, who is age 30, records itemized deductions in calculating 2017 taxable income as follows. ​ a.Calculate Darin's itemized deductions for AMT purposes using the direct method. b.Calculate Darin's itemized deductions for AMT purposes using the indirect method.

Why is there no AMT adjustment for charitable contributions?

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

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

C corporations are not required to make AMT adjustments for depreciation.

Beulah, who is single, provides you with the following information from her financial records for 2017. Compute Beulah's AMTI. ​ ​

Crimson, Inc., provides you with the following information. ​ Calculate Crimson's AMT for 2017.

Mitch, who is single and age 46 and has no dependents, had AGI of $100,000 this year. His potential itemized deductions were as follows. ​ ​ What is the amount of Mitch's AMT adjustment for itemized deductions for 2017?

Which of the following itemized deductions are allowed in full for AMT purposes?

Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.

Bianca and David report the following for 2017. ​ a.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $11,000. b.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $13,190.

When qualified residence interest exceeds qualified housing interest, the positive adjustment required in calculating AMT is a timing adjustment. That is, in the future, there will be an offsetting negative adjustment. Comment on the validity of this statement.

Joel placed real property in service in 2017 that cost $900,000 and used MACRS depreciation for regular income tax purposes. He is required to make a positive adjustment for AMT purposes in 2017 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

Which of the following statements is correct?

In May 2013, Swallow, Inc., issues options to Karrie, a corporate officer, to purchase 100 shares of Swallow stock under an ISO plan. At the date the stock options are issued, the fair market value of the stock is $1,000 per share and the option price is $1,200 per share. The stock becomes freely transferable in 2014. Karrie exercises the options in November 2013 when the stock is selling for $1,500 per share. She sells the stock in December 2017 for $1,800 per share.​ a.Determine the amount of the AMT adjustment for 2013. b.Determine the amount of the AMT adjustment for 2014. c.Determine Karrie's recognized gain for regular income tax purposes and for AMT purposes on the sale of the stock. d.Determine the amount of the AMT adjustment for 2017.

Interest on a home equity loan cannot be deducted for AMT purposes.

Celia and Christian, who are married filing jointly, have one dependent and do not itemize deductions. They report taxable income of $192,000 and tax preferences of $53,000 in 2017. What is their AMT base for 2017?