Exam 15: Alternative Minimum Tax

Vicki owns and operates a news agency (as a sole proprietorship). During 2012, she incurred expenses of $24,000 to increase circulation of newspapers and magazines that her agency distributes. For regular income tax purposes, she elected to expense the $24,000 in 2012. In addition, Vicki incurred $15,000 in circulation expenditures in 2013 and again elected expense treatment.What AMT adjustments will be required in 2012 and 2013 as a result of the circulation expenditures?

Vinny's AGI is $220,000.He contributed $130,000 in cash to the Boy Scouts, a public charity.What is Vinny's charitable contribution deduction for AMT purposes?

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a higher income level than it does for a single taxpayer.

If a gambling loss itemized deduction is permitted for regular income tax purposes, there will be no AMT adjustment associated with the gambling loss.

Lavender, Inc., incurs research and experimental expenditures of $210,000 in 2012.Determine the amount of the AMT adjustment for 2012 and for 2013 if for regular income tax purposes:

If circulation expenditures are amortized over a ten-year period for regular income tax purposes, there will be no AMT adjustment.

All of a C corporation's AMT is available for carryover as a minimum tax credit regardless of whether the adjustments and preferences originate from timing differences or AMT exclusions.

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 10-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

If a taxpayer deducts the standard deduction in calculating regular taxable income, what effect does this have in calculating AMTI?

Keosha acquires 10-year personal property to use in her business in 2012 and takes the maximum cost recovery deduction for regular income tax purposes. As a result of this, Keosha will have a positive AMT adjustment in 2012.

If Jessica exercises an ISO and disposes of the option in the same tax year, are any AMT adjustments required?

Which of the following statements is correct?

Use the following selected data to calculate Devon's taxable income.

Discuss the tax year in which an AMT adjustment is first required for an ISO.

Prior to the effect of tax credits, Wayne's regular income tax liability is $175,000 and his tentative AMT is $150,000.Wayne has nonrefundable business tax credits of $40,000.Wayne's tax liability is $135,000.

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 2012, he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile.During 2012, he paid the following amounts of interest: What amount, if any, must Ted recognize as an AMT adjustment in 2012?

Andrea, who is single, has a personal exemption deduction in calculating her 2012 taxable income.She has no dependency deductions.What is the amount of the AMT adjustment in calculating AMTI?

Luke's itemized deductions in calculating taxable income are as follows:

Tricia sold land that originally cost $105,000 for $112,000.There is a positive AMT adjustment of $7,000 associated with the sale of the land.

Under what circumstances are corporations exempt from the AMT?