Question 1

In 2017, the amount of the deduction for medical expenses for regular tax purposes may be different than for AMT purposes if the taxpayer is at least age 65.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

The use of the completed contract method

Question 3

Prior to consideration of tax credits, Clarence's regular income tax liability is $200,000 and his tentative minimum tax (TMT) is $180,000. Clarence holds nonrefundable business tax credits of $35,000. His tax liability is $165,000.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following amounts generally produce positive AMT adjustments?

Accepted Answer

A)  Real property taxes deduction. 
B)  Personal exemption deduction. 
C)  Charitable contribution deduction. 
D)  Only a. and b. are correct. 
E)  a., b., and c. are correct. 
A)  Real property taxes deduction. 
B)  Personal exemption deduction. 
C)  Charitable contribution deduction. 
D)  Only a. and b. are correct. 
E)  a., b., and c. are correct.

Question 5

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include:

Accepted Answer

A)  A different amount of depreciation has been deducted for AMT purposes and regular income tax purposes. 
B)  The spread on the exercise of an incentive stock option (ISO) is recognized for AMT purposes, but is not recognized for regular income tax purposes. 
C)  A different amount has been deducted for circulation expenditures for AMT purposes and for regular income tax purposes. 
D)  Only a. and b. 
E)  a., b., and c. 
A)  A different amount of depreciation has been deducted for AMT purposes and regular income tax purposes. 
B)  The spread on the exercise of an incentive stock option (ISO) is recognized for AMT purposes, but is not recognized for regular income tax purposes. 
C)  A different amount has been deducted for circulation expenditures for AMT purposes and for regular income tax purposes. 
D)  Only a. and b. 
E)  a., b., and c.

Question 6

Evan is a contractor who constructs both commercial and residential buildings. Even though some of the contracts could qualify for the use of the completed contract method, Evan decides to use the percentage of the completion method for all of his contracts. This increases Evan's AMT adjustment associated with long-term contracts for the current year.

Accepted Answer

A) True 
 B)False

Question 7

What is the relationship between taxable income and AMTI?

Accepted Answer

The indirect method, rather than the dir

Question 8

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts.

Accepted Answer

A) True 
 B)False

Question 9

Ted, who is single, owns a personal residence in the city. He also owns a condo near the ocean. He uses the condo as a vacation home. In March 2017, he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile. During 2017, he paid the following amounts of interest. ​
  What amount, if any, must Ted recognize as an AMT adjustment in 2017?

Accepted Answer

A) $0 
B) $4,800 
C) $6,200 
D) $11,000 
A) $0 
B) $4,800 
C) $6,200 
D) $11,000

Question 10

Which of the following statements concerning capital gains and losses and the AMT is correct? ​

Accepted Answer

A) The lower tax rate on net capital gain is not allowed in the calculation of tentative minimum tax. 
B) Net capital losses disallowed for regular tax purposes are deductible in the calculation of AMTI 
C) The lower tax rate on net capital gain applies in calculating both regular income tax and the tentative minimum tax. 
D) Net capital gain is taxed at the maximum 28% AMT rate 
A) The lower tax rate on net capital gain is not allowed in the calculation of tentative minimum tax. 
B) Net capital losses disallowed for regular tax purposes are deductible in the calculation of AMTI 
C) The lower tax rate on net capital gain applies in calculating both regular income tax and the tentative minimum tax. 
D) Net capital gain is taxed at the maximum 28% AMT rate

Question 11

The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT, because the percentage limitations (20%, 30%, and 50%) may be applied to a different base amount.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is correct?

Accepted Answer

A) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is $2,000. 
B) If the tentative minimum tax is $12,000 and the regular income tax liability is $10,000, AMT is $12,000. 
C) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is a negative $2,000. 
D) If the tentative minimum tax is $12,000, and the regular income tax liability is $10,000, AMT is $2,000. 
A) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is $2,000. 
B) If the tentative minimum tax is $12,000 and the regular income tax liability is $10,000, AMT is $12,000. 
C) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is a negative $2,000. 
D) If the tentative minimum tax is $12,000, and the regular income tax liability is $10,000, AMT is $2,000.

Question 13

The sale of business property could result in an AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is correct?

Accepted Answer

A)  If the tentative minimum tax exceeds the regular income tax liability, AMT is $0. 
B)  The AMT exemption amount decreases as AMTI increases. 
C)  The highest AMT tax rate for individuals is 26%. 
D)  Only a. and c. are correct. 
E)  a., b., and c. are correct. 
A)  If the tentative minimum tax exceeds the regular income tax liability, AMT is $0. 
B)  The AMT exemption amount decreases as AMTI increases. 
C)  The highest AMT tax rate for individuals is 26%. 
D)  Only a. and c. are correct. 
E)  a., b., and c. are correct.

In 2017, the amount of the deduction for medical expenses for regular tax purposes may be different than for AMT purposes if the taxpayer is at least age 65.

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?

Prior to consideration of tax credits, Clarence's regular income tax liability is $200,000 and his tentative minimum tax (TMT) is $180,000. Clarence holds nonrefundable business tax credits of $35,000. His tax liability is $165,000.

Which of the following amounts generally produce positive AMT adjustments?

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include:

What is the relationship between taxable income and AMTI?

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts.

Which of the following statements concerning capital gains and losses and the AMT is correct?

The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT, because the percentage limitations (20%, 30%, and 50%) may be applied to a different base amount.

Which of the following statements is correct?

The sale of business property could result in an AMT adjustment.

Which of the following statements is correct?

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 12: Alternative Minimum Tax

In 2017, the amount of the deduction for medical expenses for regular tax purposes may be different than for AMT purposes if the taxpayer is at least age 65.

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?

Prior to consideration of tax credits, Clarence's regular income tax liability is $200,000 and his tentative minimum tax (TMT) is $180,000. Clarence holds nonrefundable business tax credits of $35,000. His tax liability is $165,000.

Which of the following amounts generally produce positive AMT adjustments?

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include:

What is the relationship between taxable income and AMTI?

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts.

Which of the following statements concerning capital gains and losses and the AMT is correct? ​

The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT, because the percentage limitations (20%, 30%, and 50%) may be applied to a different base amount.

Which of the following statements is correct?

The sale of business property could result in an AMT adjustment.

Which of the following statements is correct?

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Which of the following statements concerning capital gains and losses and the AMT is correct?